Opinion: U.S. government can't afford to bail out states' budget shortfalls

Paul Mitchell

In a matter of months, the COVID-19 pandemic has changed our lives and left thousands desperate for relief. In the early stages of the outbreak there was appropriate and widespread agreement that policymakers had to act — the American people needed assistance and needed it quickly. The federal government leapt into action to address the unprecedented crisis, and has spent $2.6 trillion on its pandemic response. This doesn’t include actions taken by the Federal Reserve — which will likely total several trillion dollars — to address the economic impact of the pandemic.

According to the Pandemic Response Accountability Committee, $289.6 billion of this relief has gone to state, local and tribal governments. At the height of the pandemic, Congress passed the CARES Act which established the $150 billion Coronavirus Relief Fund and is the largest program to provide direct funding to state and local governments for covering unforeseen costs attributed directly to COVID-19.

Including state and local bailouts in our COVID-19 legislation only sets a dangerous and fiscally irresponsible precedent, Mitchell writes.

In spite of how much has already been provided, and how much is still available for use, in discussion for the next legislative response are proposals that give additional funds to state and local governments. For instance, the House Democrats’ HEROES Act would have allocated $875 billion to state and local governments, and it allows funds to replace foregone revenues.

A recent proposal by the Problem Solvers Caucus recommends an additional $500 billion go to state and local governments, and it also calls for revenue replacement.

Ideas like these are an irresponsible and precedent-setting approach that only push our national debt further out of control without addressing the actual problem. Blank checks like these do little to re-open businesses, create jobs, or address serious economic disruptions caused by the pandemic.

It is nearly impossible to ensure funding actually goes toward pandemic response by giving states massive amounts of money with no parameters. It is all too likely the funds would be used for other purposes, or pay for unrelated state and local fiscal issues that existed before the outbreak.

Rather than bailouts and revenue replacement, policymakers should advance targeted relief, such as providing grants to support first responders or distributing funds to education institutions specifically to mitigate the impacts of COVID-19.

Including state and local bailouts or revenue replacements in our COVID-19 legislation only sets a dangerous and fiscally irresponsible precedent. The federal government is already spending at an unsustainable rate. According to the Congressional Budget Office, the federal deficit is expected to reach a record $3.3 trillion this year and is on track to surpass 100 percent of GDP next year.

Blindly throwing money at state and local governments sends the message that the federal government is there to bailout and fix any and every budgetary issue. This is not a cost the federal government should take on and is not a sensible way to address the current crisis.   

Any additional COVID-19 relief measures Congress passes must be targeted and sustainable. The federal government is not responsible for bailing out state and local governments who have been plagued with budget shortfalls — many of which were present before the pandemic hit.

Rep. Paul Mitchell, R-Dryden, is congressman for Michigan’s 10th district.