Democrats Showered States And Schools With Money They Didn’t Need, And Americans Got Inflation And A Mountain Of Wasteful Spending

Democrats Ignored Republicans’ Warnings That $350 Billion For States And Over $120 Billion For Schools In Their Partisan Spending Bill Last Year Were Excessive And Inflationary, And Subsequent Reporting Has Shown That States Didn’t Need The Money And Are Now Blowing It On Wasteful Projects, While School Districts Have Spent Next To None Of What They Received


‘The Fact Is The Fiscal Armageddon That Covid-19 Was Expected To Bring To’ State Governments ‘Never Happened,’ ‘Instead, States Are Flush With Cash After Both Congress And The Federal Reserve Primed The Economy With Trillions Of Dollars’

“The fact is the fiscal armageddon that Covid-19 was expected to bring to America never happened. Instead, states are flush with cash after both Congress and the Federal Reserve primed the economy with trillions of dollars. Now most states are sitting on surpluses they could have never imagined.” (“Biden’s Rescue Money Doled Out To Racehorse Owners, Influencers,” Bloomberg, 5/16/2022)

  • “State and local governments lost at least $117 billion of expected revenue early in the pandemic, according to an Associated Press analysis, but many are now awash in record amounts of money, boosted partly by federal aid. In response to the dramatic turnaround, governors, lawmakers and local officials have proposed a surge in spending as well as a new wave of tax cuts. ‘The ultimate effect of the pandemic was a net positive,’ said Stephen Parker, assistant city manager for the Los Angeles suburb of Upland, where sales tax revenues are soaring. ‘Isn’t that unbelievable? It’s just crazy to think of that.’ … In many places, the revenue rebound exceeded pre-pandemic levels. Total state tax revenues from [April 2021] through November [2021] rose 20% compared to the same period in 2019, according to an Urban Institute report released [in January 2022].” (“After Huge Pandemic Losses, Governments See Rapid Rebound,” The Associated Press, 1/28/2022)

Even At The Time Democrats Passed Their Partisan Spending Bill Last Year, Stuffed With $350 Billion For State Governments, It Was Apparent That ‘For Many [States] The Worst Didn’t Come’ And ‘Tax Collections Turned Back Up Again, All In The Span Of A Few Months’

“Democrats have argued … that states face dire fiscal consequences without aid, and included $350 billion in relief for state and local governments in President Biden’s $1.9 trillion federal stimulus bill … As it turns out, new data shows that a year after the pandemic wrought economic devastation around the country, forcing states to revise their revenue forecasts and prepare for the worst, for many the worst didn’t come…. By some measures, the states ended up collecting nearly as much revenue in 2020 as they did in 2019. A J.P. Morgan survey called 2020 ‘virtually flat’ with 2019, based on the 47 states that report their tax revenues every month … A researcher at the Urban-Brookings Tax Policy Center, a nonpartisan think tank, found that total state revenues from April through December were down just 1.8 percent from the same period in 2019. Moody’s Analytics used a different method and found that 31 states now had enough cash to fully absorb the economic stress of the pandemic recession on their own.” (“Virus Did Not Bring Financial Rout That Many States Feared,” The New York Times, 3/01/2021)

  • “Most state tax collections plunged last spring when shutdown orders started and millions were thrown out of work as businesses closed. That prompted many states to issue doomsday forecasts, lay off workers and turn to Washington for billions of dollars in aid to replace revenue they were expecting to lose. Many feared a replay of the Great Recession … But this time, after falling 4 percent over all, [Brookings Institution economist Louise] Sheiner said, tax collections turned back up again, all in the span of a few months.” (“Virus Did Not Bring Financial Rout That Many States Feared,” The New York Times, 3/01/2021)

FLASHBACK: Senate Republicans Warned Against ‘A Massive Cash Bailout For Mismanaged State And Local Governments, Multiple Times The Size Of Covid Needs,’ Featuring ‘Parameters … So Loose That I Can’t Imagine What Projects Will Be Dreamed Up To Be Spent On’

SENATE REPUBLICAN LEADER MITCH McCONNELL (R-KY): “[E]xperts agree the remaining damage to our economy does not require another multi-trillion-dollar, non-targeted band-aid…. It will not serve Americans to pile another huge mountain of debt on our grandkids for policies that even liberal economists say are poorly-targeted to current needs. … This is no time to send wheelbarrows of cash to state and local governments that they simply, factually, do not need…” (Sen. McConnell, Remarks, 2/04/2021)

  • SEN. McCONNELL: “Then there’s the $350 billion bailout for state and local governments, many of whom have already seen revenues and receipts rebound. It’s several multiples of any sober estimate of actual need.” (Sen. McConnell, Remarks, 2/24/2021)
  • SEN. McCONNELL: “This isn’t a pandemic rescue package. It’s a parade of left-wing pet projects that they are ramming through during a pandemic. … A massive cash bailout for mismanaged state and local governments, multiple times the size of COVID needs...” (Sen. McConnell, Remarks, 3/05/2021)

SENATE REPUBLICAN WHIP JOHN THUNE (R-SD): “If President Biden would like to know what to cut, let me suggest starting with the bill’s $350 billion slush fund for States…. A number of States actually saw higher tax revenues in 2020…. Even if the Federal Government bailed out those States that are still struggling--some, at least partially, because of their own mismanagement--$350 billion far exceeds the amount that would be needed. Democrats are simply providing a large and unnecessary giveaway to States with the distribution formula heavily weighted in favor of blue States.” (Sen. Thune, Congressional Record, S.968, 3/01/2021)

SEN. SHELLEY MOORE CAPITO (R-WV): “Twenty-one States have actually experienced revenue growth compared to 2019, 2020. Yet this bill expends $350 billion to States. This money needs to be targeted…. And the parameters of this are so loose that I can’t imagine what projects will be dreamed up to be spent on.” (Sen. Capito, Congressional Record, S.977, 3/01/2021)


Liberal Economist Jason Furman: ‘It Was Larger Than It Needed To Be,’ ‘[I]t’s Also Part Of Why We Have Incredibly High Inflation’

CBS’ MARGARET BRENNAN: “How much are Democrats actually to blame for continuing to pump in pandemic-era spending at a time when the economy was already recovering last spring?”
JASON FURMAN, Former Obama White House Chairman of the Council of Economic Advisers: “Look, in March of 2021, the president signed the American Rescue Plan into law…. [I]t’s also part of why we have incredibly high inflation. I wished at the time that he did something smaller. I think it was larger than it needed to be.” (CBS’ “Face the Nation,” 5/22/2022)


The Biden Stimulus’ Wasteful Spending ‘Is A Window Into Just How Extreme The Federal Largesse Was … Only Pouring Fuel On An Inflation Spiral’

“The fact is the fiscal armageddon that Covid-19 was expected to bring to America never happened. Instead, states are flush with cash after both Congress and the Federal Reserve primed the economy with trillions of dollars. Now most states are sitting on surpluses they could have never imagined [and] … they’re also plowing money into programs far down the typical wish list. The bonanza is a window into just how extreme the federal largesse was and, to some, it’s only pouring fuel on an inflation spiral the Fed is now trying to quell.” (“Biden’s Rescue Money Doled Out To Racehorse Owners, Influencers,” Bloomberg, 5/16/2022)

States Are Using The Stimulus Money ‘To Boost Purses’ At Horse Tracks, Fund Improvements For NASCAR Speedways, And Pay Social Media Influencers To Promote Seafood

“When President Joe Biden made the case for a nearly $200 billion pandemic aid package to help states dodge budget cuts and layoffs, quarter-horse racing never came up. Yet, Arizona is now using a portion of its aid to boost purses at three of its horse tracks. Alaska is paying social-media influencers to promote the state’s famous seafood. And North Carolina is funding improvements to a speedway for Nascar races and building new walking trails dedicated to the history of moonshine.” (“Biden’s Rescue Money Doled Out To Racehorse Owners, Influencers,” Bloomberg, 5/16/2022)

  • “The US Treasury gave state and local governments wide latitude on how to use the federal funds. But some of the spending in the name of economic development could be seen as controversial in the same way as tax credits for the film industry or public funds for professional sports arenas. North Carolina, for instance, is using $40 million to reinvigorate its motorsport complexes -- an economic driver in the state’s rural areas -- after its iconic Charlotte Motor Speedway, where Nascar drivers will compete in the Coca-Cola 600 this month, couldn’t host events at full capacity for over a year. Meanwhile in Alaska, a portion of the state’s aid is being paid out to influencers on social media. The state is devoting $7 million of its aid to the Alaska Seafood Marketing Institute, which ran an #AlaskaSeafoodHacks campaign that paid influencers and bought advertising in Europe in order to promote the state’s salmon, among other fish, according to Ashley Heimbigner, an institute spokesperson.” (“Biden’s Rescue Money Doled Out To Racehorse Owners, Influencers,” Bloomberg, 5/16/2022)

‘Minneapolis Is Dedicating $1 Million In American Rescue Plan Funds To Expanding The Urban Tree Canopy’

“Minneapolis is dedicating $1 million in American Rescue Plan funds to expanding the urban tree canopy. The money will jump-start the Green Minneapolis Climate Resiliency Initiative goal to add 200,000 trees by the year 2040. City and Minneapolis Park and Recreation Board officials announced the initiative Monday alongside Elmer the Elm Tree, the official mascot of the Forestry Department since 1976.” (“Minneapolis Uses $1 Million In Federal Funds To Add 200,000 Trees,” Star Tribune, 5/16/2022)

And California Is Using Its $98 Billion Surplus, ‘Bigger Than The Budget Of Every State Besides Texas, Florida And New York,’ To Go On A Spending Spree

THE WALL STREET JOURNAL EDITORIAL BOARD: “California Gov. Gavin Newsom must feel like he won the lottery, and in a political sense he has. A year ago he and other Democratic Governors were begging for a federal bailout. Last week he announced a $98 billion surplus, which he wants to spend as if, well, there’s an election coming. Mr. Newsom revealed the giant surplus in his updated $301 billion budget plan. State coffers have swelled by 40% during the pandemic thanks to Congress’s Covid spending and a capital-gains revenue gusher from surging asset prices. California’s surplus alone is bigger than the budget of every state besides Texas, Florida and New York. Many GOP states are using their windfalls to cut taxes. Not California. Mr. Newsom proposes to spend his surplus on buying votes and ameliorating the #Californiaproblems that progressive policies have created.” (Editorial, “Gavin Newsom’s Re-Election Windfall,” The Wall Street Journal, 5/20/2022)

  • “The biggest budget winner as usual is the teachers unions. Public schools will get $128 billion, a 25% increase over pre-pandemic levels, though student enrollment has shrunk by 270,000…. Mr. Newsom also wants to give $400 to every registered vehicle owner, including those with electric cars. He wants to mitigate the political damage to Democrats from California’s high gas prices, which are $1.50 a gallon more than the national average. The causes are high taxes and environmental regulation. Yet Democrats don’t want to ease those because higher gas prices encourage people to buy electric cars. Better to send everyone checks. The Governor also wants the state to pay unpaid utility bills. State electricity prices have surged 13.5% this past year and are twice as high as in neighboring states, again thanks to green-energy mandates. Some folks are struggling to pay their bill, and Mr. Newsom wants to pay it for them. His budget includes $750 million for mass-transit agencies to make trips free. Los Angeles’s Metro stopped collecting fares during the pandemic, which resulted in more homeless people on subways and buses. Now many commuters are avoiding mass transit because it’s dangerous and dirty…. The Governor tacitly acknowledges that California’s declining quality of life and increasing cost of living are driving away businesses. Thus he proposes $2 billion to bribe them to return.” (Editorial, “Gavin Newsom’s Re-Election Windfall,” The Wall Street Journal, 5/20/2022)


Democrats’ Spending Spree Also Showered School Districts With $122 Billion, ‘The Largest-Ever Disbursement Of Federal Funding For American Schools,’ But 93% Of That Cash Remains Unspent

“U.S. school districts are struggling to spend billions of dollars in federal pandemic-relief money before the funding expires. Districts have yet to spend 93% of $122 billion sunk into the K-12 education system last year as part of the $1.9 trillion American Rescue Plan, according to data compiled by the U.S. Department of Education.” (“Billions in School Covid-Relief Funds Remain Unspent,” The Wall Street Journal, 5/18/2022)

“The money [is] the largest-ever disbursement of federal funding for American schools …” (“Billions in School Covid-Relief Funds Remain Unspent,” The Wall Street Journal, 5/18/2022)

FLASHBACK: Republicans Pointed Out That Billions Of Dollars Sent To School Districts Hadn’t Yet Been Spent When Democrats Were Pushing Their New Partisan Spending Bill …

SENATE REPUBLICAN LEADER MITCH McCONNELL (R-KY): “Just look at the proposed money in [Democrats’] new partisan bill for K-12 schools. They call it an ‘emergency relief fund.’ But just 5% of the money they want would be spent in fiscal year 2021. 95% of this so-called emergency relief for schools would go out in fiscal 2022 and beyond.” (Sen. McConnell, Remarks, 2/22/2021)

SEN. ROY BLUNT (R-MO): “Nothing in the bill we’re talking about is designed to get kids back in school. In fact, if money was the solution, there’d be no problem. We’ve already appropriated $67 and a half to elementary and secondary education as of--as of February 1, I think $5.1 billion of that had been spent. So, $60 billion available to get kids back in school and none of it being used for that purpose.” (Sen. Blunt, Press Conference, 3/02/2021)

SEN. RICK SCOTT (R-FL): “[L]ast year, Congress allocated $68 billion for K-12 education and approximately $4 billion of it has been spent. So it clearly is not waiting for money…. In the new bill, they wanted to spend over $120 billion that 95 percent of it will not be spent this year opening schools.” (Sen. Rick Scott, Press Conference, 2/23/2021)

… Yet Democrats Claimed That ‘[T]he Only Way To Safely Reopen Schools’ Was To Deluge Them With Over $120 Billion

PRESIDENT JOE BIDEN: “[W]ith the passage of the American Rescue Plan … and my announcement last month of a plan to vaccinate teachers and school staff, including bus drivers, we can accelerate the massive, nationwide effort to reopen our schools safely and meet my goal, that I stated at the same time about 100 million shots, of opening the majority of K-8 schools in my first 100 days in office.” (President Biden, Remarks, 3/11/2021)

SENATE MAJORITY LEADER CHUCK SCHUMER (D-NY): “Simply put, there’s no replacement for having kids in the classroom. We need to get our schools to re-open as quickly and as safely as possible…. In short: the American Rescue Plan will greatly accelerate the safe and effective re-opening of schools.” (Sen. Schumer, Remarks, 3/17/2021)

SEN. PATTY MURRAY (D-WA), Senate HELP Committee Chair: “[T]he only way to safely reopen schools for in-person learning and keep them open is to provide the $125 billion that is included in the American Rescue Plan Act for our K-12 schools. This Federal funding will support schools in their implementing safety protocols that are aligned with local public health guidance in order to safely reopen, stay open, and help students with learning recovery.” (Sen. Murray, Congressional Record, S.1236, 3/05/2021)



Related Issues: Inflation, Senate Democrats