State and local officials are wasting no time to spend millions from CARES Act before it is reverted back to the federal government. They are spending the money on projects such as a free college program, and universal income.
The CARES Act provides $139 billion in payments to states and local governments, providing for police services dealing with extra costs, and assisting local business owners, struggling under lockdown regulations.
Some States are requesting more financial ade before they have even tapped into the primary amount. Michigan Gov. Gretchen Whitmer is spending the money on pet projects such as free college for 600 000 essential workers, while Honolulu mayor spent $629,000 to hire 15 community relations specialists.
Democratic St. Paul Mayor Melvin announced that guaranteed income program for low-income families using $300 000 of CARES Act money. However Democrat Rep. Betty McCollum, D-Minn has warned the Mayor that this sort of spending could fall outside of the federal guidelines.
Our People’s Prosperity Guaranteed Income Pilot Program will support our most vulnerable families while helping build the case for permanent guaranteed income programs at state and federal levels. https://t.co/etfaHoKM1B
— Mayor Melvin Carter (@MayorCarter) September 4, 2020
“Without explicit federal approval, is the City prepared to take on costly litigation should the Trump administration challenge the legality of the pilot program?” McCollum wrote, according to the Twin Cities Pioneer Press.
Sen. Rick Scott has been critical of the spending: “Senator Scott supports using CARES Act funding for its intended purpose to help those struggling due to the coronavirus,” “He does not support using funds intended for the coronavirus to bail out the poorly-managed budgets and pension plans of liberal states.”
Looking back at the support received during the great recession, Adam Michel of the conservative Heritage Foundation warned that irresponsible use of federal funds could lead to higher taxes for residents.
“State and local bailouts create an incentive for state and local leaders to expand existing programs beyond sustainable levels, add new programs, and simultaneously underfund those programs in hopes of further federal support,”. “After the Great Recession, 28 states built their budgets around the expectation that Congress would renew expired funding.”
“When the federal money runs out, states have historically increased taxes; each dollar of federal grant money sent to states results in 40 cents of state and local tax increases,” he continued.
Congress is likely to publish another coronavirus relief package
Democrats are pushing for more funding to be distributed even tho only 25% of the package has actually been spent. Last week, the House of Representatives said it would extend its session until a deal is reached.
As the political climate in Washington is rather charged at the moment, negotiations might go on till after the November 3rd elections. A Democrat majority in the senate or even control of the white house would see the new package passed almost immediately.
The government’s response to the coronavirus pandemic is already a hot topic of debate on the campaign trail. If a deal isn’t reached, the topic of a relief package could very well come up during town halls or debates held in the coming weeks.