And because the U.S. system is a total mess, Republicans have repeatedly prevailed in court in their insistence that they can use the federal money for something other than what it was allocated for. Rather than investing in public health, vaccinations, state or local government capacity to deliver services, or education—where staffing is a crisis, having dropped by nearly 5% since the beginning of the pandemic—Republicans are playing budget games where they claim they’re paying for a tax cut out of the state’s general coffers, then move federal relief money into said general coffers from the agencies that were supposed to be spending it on the purposes for which it was intended.
That’s dangerous, the Tax Policy Center’s Lucy Dadayan told The Washington Post, because “Once the states run out of the federal funds, then they are going to face challenges to fill the gap for lost revenues.”
At the urging of the Chamber of Commerce, more than a dozen states have spared businesses tax increases by pouring billions in federal money into replenishing their unemployment insurance funds, which had been drained by the early-pandemic jobs crisis. That $14 billion hasn’t gone to other priorities, all to protect businesses from fulfilling their responsibilities when they cause workers to become unemployed.
In May, Florida Gov. Ron DeSantis signed a plan paying for a $200 million pause in the state’s gas tax with COVID-19 relief money, a move that at least didn’t exclusively benefit the wealthy, but was nonetheless in violation of the federal law—and damaging to people in Florida, who will miss out on the investments the ARPA was supposed to cover.
“You have to look at the opportunity cost of what else they could have done with American Rescue Plan dollars,” Esteban Santis, a budget analyst at the Florida Policy Institute, told The Washington Post.
Tax breaks over services is a standard Republican move. What’s different right now is that Republicans are using federal money that came to their states with specific intentions, diverting the money from doing the work Congress allocated it for in order to slash taxes. That weakens the economy and will be a real liability if a recession hits. But Republicans don’t care—if anything, they embrace it.
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