Episode 293
Oct 6, 2020

The state of state economies

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More coronavirus relief is a month away, at least. How will state and local economies fill their $155 billion deficit in the meantime?

President Donald Trump pulled the plug on a coronavirus relief package Tuesday, tweeting that he would sign a bill after the election.

For months now, Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin have been going back and forth over a plan, with as much a $1 trillion difference between their proposals. One key issue: help for state and local governments, which are facing a $155 billion deficit, according to Brookings Institution economist Louise Sheiner.

“State and local governments mostly have balanced budget requirements, so they are not allowed to borrow to finance their operations,” Sheiner said. “When revenues fall, they have to make it up somehow — either by raising taxes or much more likely by cutting spending.”

On today’s show, Sheiner will walk us through the role state and local economies play in the larger economic picture and what their needs are in a recession that looks very different from 2008. Finally, we’ll ask her: How worried should local workers be right now?

“Well … so much depends on the election,” Sheiner said, with a laugh.

That ended up being quite prescient — about an hour after we taped this interview, Trump announced there would be no aid deal until after Election Day.

Later in the show, we’ll talk about vaccines, K-shaped recoveries and what it means to get “Zucked.” Plus, Broadway producer Eva Price answers the Make Me Smart question.

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Here’s a list of everything we talked about today:

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The team

Molly Wood Host
Jody Becker Interim Senior Producer
Tony Wagner Digital Producer
Sam Anderson Associate Producer