COVID-19

Aid for state, local governments a sticking point in federal COVID-19 relief

Sabri Ben-Achour Oct 6, 2020
Heard on: Marketplace
HTML EMBED:
COPY
House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer talk in July. President Trump tweeted Tuesday stimulus talks with Congress are put on hold until after the election. Brendan Smialowski-Pool/Getty Images
COVID-19

Aid for state, local governments a sticking point in federal COVID-19 relief

Sabri Ben-Achour Oct 6, 2020
House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer talk in July. President Trump tweeted Tuesday stimulus talks with Congress are put on hold until after the election. Brendan Smialowski-Pool/Getty Images
HTML EMBED:
COPY

Federal Reserve Chair Jerome Powell issued a dire warning Tuesday. He said too little coronavirus relief from the federal government could usher in a recessionary slowdown that he said would be “tragic.”

That’s a strong word from the head of an institution that watches its words like no other. 

Hours later, President Trump tweeted that he was calling off stimulus talks with Congress until after the election.

It’s been months since any relief bills were passed, and state and local governments need help paying for things like unemployment benefits, education and public health. 

“These are incredibly important services that are being provided to people and that are helping people through this really difficult time,” said Julia Wolfe, state economic analyst at the Economic Policy Institute. 

The main sticking point during negotiations was over how much money to give. Republicans were inclined to offer $200 to $400 billion, while Democrats were asking for $900 billion. 

“It is one of the more obvious examples of an attempt to inflate state budgets beyond any reasonable measure of actual need,” said Adam Michel, senior policy analyst at the Heritage Foundation. 

Republicans point to hundreds of billions in COVID-19-related aid that’s already been passed and argue states should cut pensions, freeze pay and dip into rainy day funds. 

Irma Esparza Diggs, director of federal advocacy for the National League of Cities, said many hard-hit cities are already laying off employees and cutting services.

“Some are seeing as high as up to a 50% decline in sources of revenues,” she said.

She estimates cities alone will need $360 billion over the next three years. 

Timing is another issue, said Stan Veuger, a resident scholar in economic policy studies at the American Enterprise Institute.

According to Veuger, the question remains: “Should we provide funding to state and local governments for the coming fiscal year, or should we give them money for the year after that as well?”

COVID-19 Economy FAQs

New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?

Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday  — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

Read More

Collapse

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.