“Without assistance from the federal government, [state and local] layoffs will act as a drag on the recovery for years to come.”
Washington, DC–As lawmakers continue to negotiate the details of a COVID-19 response package, an influential voice on the right is calling on Congress to help American cities hit hard by the pandemic. In a recent op-ed, conservative scholar Michael R. Strain, director of economic policy studies at the conservative American Enterprise Institute (AEI) urged Democrats and Republicans to include direct assistance to state and local governments in a pandemic recovery bill.
“Republicans should recognize that states and localities were in the same position as businesses and households when the pandemic hit: unprepared for a once-in-a-century crisis and the economic devastation it wrought,” wrote Strain. “It is unreasonable to withhold aid on the grounds that they should have been prepared; even the best-managed states are in bad shape today.”
To date, only 38 cities have qualified for direct federal assistance to help mitigate the budget crises caused by the coronavirus pandemic and those that did qualify were unable to use those funds to offset pandemic-driven budget shortfalls. The result has been layoffs, furloughs, and cuts to critical services including public safety. Strain, the AEI scholar, notes without federal assistance now, this crisis hitting cities today could have consequences for years to come.
“States are both providers of essential services and major employers. When the pandemic hit, and businesses had to scale back operations, demand for states’ services increased at the same time that their tax revenue plunged. Balanced-budget requirements generally mean that states can’t run deficits, so their only choices are to lay off workers and cut essential services. This is the opposite of what businesses and households need.
“State and local government employment is down 1.3 million jobs since February. Without assistance from the federal government, these layoffs will act as a drag on the recovery for years to come. We’ve seen this movie before: It took over a decade for state and local employment to recover from the Great Recession, in part due to inadequate federal aid.”
Mayors from cities large and small – Republican, Democratic and Independent alike – have been insisting that cities be a part of the solution since the very beginning of this public health crisis, sounding the alarm about the urgently needed fiscal assistance to position cities to drive, not drag recovery. Independent economic voices from the right and left agree.