SALT LAKE CITY – Sen. Mike Lee, R-Utah, and other fiscally conservative Senate colleagues are loudly protesting what they consider to be a $1 trillion blue-state bailout being considered in Congress.
In an April 30 letter to President Donald Trump, Lee and four like-minded senators voiced their opposition to any additional stimulus funding to states the might be used “to bail out unfunded pensions, reward decades of state mismanagement or incentivize states to become more reliant on federal taxpayers.”
That same day, House Speaker Nancy Pelosi, D-California, argued that state and local governments need $1 trillion in federal financial support to prevent layoffs as their revenues shrink due to the Coronavirus shutdown.
“Many jurisdictions are facing rising costs from the health pandemic and plummeting revenues from the economic shutdown.” Pelosi argued. “The best way America can support front-line community workers is to make sure that they don’t lose their jobs to budget cuts.”
But Sen. Lee says that some state and localities are advocating that a future Coronavirus response measure be used as “a piggy bank” for prior expenses that are unrelated to the ongoing pandemic.
“States like New York are calling for billions in unrestricted aid,” according to the senators’ letter to Trump. “Not just money for Coronavirus recovery, but also for pre-existing state programs and debts. New York’s rainy day fund is one of the lowest in the nation and the state owes over $450 billion in unfunded pension and post-employment benefits.
“Other states are in even worse shape. Illinois has already requested a $40 billion bailout, most of which would go to pension and budget shortfalls caused by decades of fiscal mismanagement.”
The senators also pointed out that the national debt is already projected to top $25 trillion by the end of the year.
After initially rejecting Democrats’ demand for another round of Coronavirus recovery spending, Senate Majority Leader Mitch McConnell has softened his stand in recent days, suggesting that he is open to negotiate about financial support for state and local governments.
Even Sen. Lee and his colleagues – GOP Senators Ted Cruz of Texas, Rick Scott of Florida, Ron Johnson of Wisconsin and Mike Enzi of Wyoming – are not entirely opposed to that type of assistance.
“We are supportive of funding to respond to the Coronavirus and support our frontline workers,” they emphasize. “But we cannot allow states and localities to get a blank check from American taxpayers to fund areas of their budgets that have nothing to do with the Coronavirus.”
Recent comments from Trump seem to hint that the President is prepared to drive a hard bargain with Congress on this topic.
“We’ll have to see what happens,” Trump replied when asked about funding assistance for state and local government at a recent Coronavirus briefing at the White House.
“If we do that, “ the President added, “we’ll have to get something for it.”