Biden: Governors, mayors need $350 billion to fight COVID-19

President Joe Biden invited governors and mayors to the White House Friday in a push to give financial relief to state and local governments — a clear source of division with Republican lawmakers who view the spending as wasteful.

Thousands of Pennsylvanians might soon owe their jobs to Georgia voters.

When the Peach State sent Rafael Warnock and Jon Ossof to the U.S. Senate rather than their Republican rivals, they gave Democrats control of the Senate, thus reviving the possibility of billions of dollars in aid to state and local governments whose budgets were devastated by the pandemic — governments that have been openly contemplating widespread layoffs.

“It’s really a jobs issue and a public safety issue at its core,” U.S. Sen. Bob Casey Jr., D-Scranton, said. In Pennsylvania, those governments employ almost 600,000 people, from temporary office workers and court clerks to teachers and police, according to the U.S. Bureau of Labor Statistics. Through much of 2020, local and state officials pleaded with Congress and then-President Donald Trump to include billions in federal spending to fill the holes blown in their budgets by the pandemic-driven economic slowdown, but leaders of the Republican-run Senate dismissed the requests as bailouts that would mostly benefit Democratic controlled state and local governments.

Indeed, the most recent COVID-19 relief package proposed by GOP senators is a $618 billion package that includes nothing for struggling public-sector budgets beyond extra costs associated with mass vaccinations.

But victories in the two Georgia runoff races gave Democrats razor-thin control of the Senate — something that, at least as much as President Joe Biden’s win, makes state and local aid a near certainty. Biden’s COVID-19 proposal is more than three times the size of that of the Republicans. Biden’s proposal is for $1.9 trillion and includes $350 billion in aid for state and local governments across the country.

“The $1.9 trillion proposal the administration is trying to get through has a lot of good things for states, including things like the state and local government support that we’ve been calling for really since summer,” Gov. Tom Wolf said. “And that’s never been brought across the finish line. I think there’s real hope now this will actually happen.”

Most Republicans, including U.S. Sen. Pat Toomey, R-Lehigh, say they’re wary of another wave of deficit spending after the nearly $4 trillion in emergency spending authorized in the last year. Toomey declined to be interviewed, but his office released a statement noting the “staggering” emergency measures almost match the annual federal budget.

“The economy has rebounded well since last April. The unemployment rate has fallen by more than half of what it was then and savings and disposable income rates are currently at or near record high levels. Another round of stimulus checks and other aid will not address the biggest problem facing Americans — concerns about traveling, socializing, and dining out during the pandemic. Getting the vaccine into people’s arms as quickly as possible does,” Toomey’s statement says.

History lesson

Both the Biden and GOP relief bills include tens of billions for vaccine distribution, but economists have warned that alone won’t be enough to jump-start an economy that all but shut down in the spring. The debate echoes one Casey was part of during his first term, after President Barack Obama took office in 2009.

Then, as now, an economic crisis threatened to usher in a second Great Depression. Then, as now, Democrats controlled the executive and legislative branches. But then, unlike now, the conservative wing of the Democratic party recoiled at the idea of a relief package with a trillion-dollar price tag.

“There’s no (expletive) way” a package that large would pass, the famously profane Rahm Emanuel, Obama’s first chief of staff, said in a meeting on the economic crisis, according to Obama’s memoir, “A Promised Land.”

Mirroring their Republican counterparts today, congressional Democrats at the time also griped about bailing out red-state governors, whom they feared would use Congress- approved aid to balance their own budgets and then accuse Washington lawmakers of “spending like drunken sailors,” Obama wrote.

Political maneuvering whittled down the 2009 stimulus from the more than 1 trillion dollars economists recommended to $787 billion.

“That was not enough. We had a very slow recovery that took years,” Casey said last week. “All the economists are telling us right now — even the economists on the right are telling us — you’ve got to spend to get out of this rut that we’re in, get the economy out of the ditch that we’re in. If you don’t spend at an appropriate level or a level that’s commensurate with the moment we’re in, you’re going to put yourself in a real bind.”

Many Republicans outside of Washington sing a similar tune.

“We need to go big, and if we waste some money now, well, we waste some money,” West Virginia Gov. Jim Justice, a Republican whose state Trump won by nearly 40 percentage points in November, told MSNBC on Feb. 1. “We’ve got too many people hurting, and the economy’s going to sputter and we’ve got to get ourselves out of this mess.”

The next day, West Virginia Sen. Joe Manchin, a former governor now considered the most conservative Senate Democrat and a key swing vote in the closely split chamber, signaled he’d be willing to push through an expansive bill over Republican objections. Manchin said he’d vote to advance the budget reconciliation process to allow Democrats’ COVID-19 relief package to bypass an expected GOP filibuster. It’s the same process Republicans used to pass massive tax cuts in Trump’s first year over Democratic objections.

Budget troubles

U.S. Rep. Chrissy Houlahan, a Democrat, represents parts of Berks County, which voted for Trump, and Chester County, which voted for Biden.

“Both have asked, slash, begged me ... that those kinds of funds are included, and we haven’t had successor luck yet,” Houlahan said of the two counties.

Those local governments were financially well-situated before the pandemic, she said. Trouble began in March, then accelerated during a catastrophic April when the country lost more than 20 million jobs, the steepest losses in United States history. About half of those jobs came back during the following seven months, but at a slower and slower pace until, in December, the economy shed jobs once again.

Fewer jobs means less wages. Less wages means lower tax collections.

“If you have the worst public health crisis in 100 years, that public health crisis leads to an economic calamity, and part of an economic calamity is that state and local county governments have their budgets devastated,” Casey said.

Congress passed the CARES Act in March with just six “no” votes in the House and zero in the Senate. The $2.2 trillion bill set aside $150 billion for state and local governments, but it wasn’t enough for everyone. Pittsburgh, a city that spent a decade clawing its way back from insolvency, blew through its entire $120 million in savings to make ends meet during the ensuing months, Mayor Bill Peduto said in his budget address in November.

Without federal aid, 634 city workers will lose their jobs next fiscal year, he said.

Lancaster County entered the pandemic in the best financial shape it had been “in many, many years, if not ever,” county commissioners Chairman Josh Parsons said.

“We’re in a decent position, given the year we had, and that’s why I think they need to be very thoughtful about what they do because the national debt is going to be a crisis at some point,” Parsons said of Congress’ stimulus discussions.

He expects the county’s next budget to be difficult, as restaurant and other business closures depress property tax revenue.

The county still has $4 million of the $90 million provided to it by the CARES Act, Parsons said. The money already spent paid for testing and economic recovery partnerships, as well as aid to nursing homes, municipalities and first responders, he said. Congress’ decision to give that money directly to counties with more than 500,000 people was key to Lancaster’s ability to get the aid out the door as quickly as possible, Parsons said.

“If there is going to be anything else, it should go to counties directly rather than through the state because we got it faster and we were more effective with it,” Parsons said.

Casey stressed that the federal government’s ability to issue debt is crucial to the recovery.

“The only entity in our society that can come to the aid of state governments and local governments to preserve those jobs is the federal government because the federal government can deficit spend — and we have to deficit spend when we have an emergency,” Casey said. “There’s been broad agreement between Democrats and Republicans that we have to deficit spend.”

Broad, but not universal

State Rep. Frank Ryan, R-Lebanon, made a career of saving businesses from bankruptcy. He has consistently warned of a looming day of reckoning for shaky publicsector budgets. And he said a nostrings- attached cash infusion from the federal government just papers over structural problems that will get worse before addressing them becomes unavoidable.

It’d be a different story if the $350 billion were earmarked entirely for infrastructure, which adds economic value in a host of ways, Ryan said.

That sentiment could offer room for rare agreement between the Republican legislator and Pennsylvania’s Democratic governor.

“There’s a crying need for infrastructure— transportation, broadband, mass transit, flood hazard mitigation, all the things I was talking about in my Restore PA plan. I think this is a good time to do that,” Wolf said.

Not all debt is created equal. An economic downturn means lower interest rates as lenders try to offset uncertainty by offering more favorable terms. The upshot, therefore, is that borrowing during a recession costs less than borrowing during boom times.

“What we have right now is a real opportunity. We make a major investment in infrastructure, it’s going to create a huge number of new jobs and it’s going to improve the American economy. And with interest rates so low, it’s one of those things that we really can’t afford not to do,” Wolf said.

Wolf said he pitched infrastructure spending to Congress, and Houlahan said an “ambitious and resilient transportation and infrastructure initiative” should be up for discussion.

But there’s not much time for such granular targeting in the relief bill. What seemed like an impossibility mere months ago — local and state bailouts — is, thanks to the new Democratic Senate majority, part of a relief package that’s moving with fierce urgency, Casey said.

“Since the CARES Act we haven’t made the type of investments we need to preserve jobs — and these are jobs,” Casey said. “They’re a very particular type of job — jobs that a community relies upon, whether it’s firefighters or law enforcement, public safety, teachers.”

Lawmakers should aim to have the bill on Biden’s desk by the end of the first full week after Trump’s impeachment trial wraps up, Casey said when interviewed in early February. [The timeline looks to be early-to-mid-March at this point, given Congress is doing little work this week.] And unlike 2009, time — not bipartisan buy-in — should dictate the pace, he said.

“I like bipartisanship, and I want to pursue it as far as we can,” Casey said. “But can’t have two months of hand-holding to do bipartisanship when people are hurting and we’ve got to get vaccines into the arms of tens of millions of Americans. We’ve got to act.”

Follow The Caucus on Twitter ​@CaucusPA, ​@BEBumsted, ​@Wrschgn and ​@SamJanesch.

What to Read Next