13 March 2021

Some Foresight Here

I did not expect the Democrats to insert a section into the stimulus bill preventing states from cutting taxes with relief money, but this is what they did.

I guess that they have enough experience in dealing with Republican ideology to realize that giving money to states would be subject to sabotage otherwise:

A last-minute change in the $1.9 trillion economic relief package that President Biden signed into law this week includes a provision that could temporarily prevent states that receive government aid from turning around and cutting taxes.

The restriction, which was added by Senate Democrats, is intended to ensure that states use federal funds to keep their local economies humming and avoid drastic budget cuts and not simply use the money to subsidize tax cuts. But the provision is causing alarm among some local officials, primarily Republicans, who see the move as federal overreach and fear conditions attached to the money will impede upon their ability to manage their budgets as they see fit.


Under the new law, $25 billion will be divided equally among states, while $169 billion will be allocated based on a state’s unemployment rate. States can use the money for pandemic-related costs, offsetting lost revenues to provide essential government services, and for water, sewer and broadband infrastructure projects.

But they are prohibited from depositing the money into pension funds — a key worry of Republicans in Congress — and cannot use funds to cut taxes by “legislation, regulation or administration” through 2024.


Senator Joe Manchin III, Democrat of West Virginia, explained why he pushed for the language in a briefing this week, arguing that states should not be cutting taxes at a time when they need more money to combat the virus. He urged states to postpone their plans to cut taxes.

It sounds like Joe Manchin, for once, did something useful.  (You could knock me over with a mackerel)

Still, the tax language has angered Republicans — none of whom voted for the rescue package — and on Thursday, Senator Mike Braun, Republican of Indiana, introduced legislation to reverse it.
Oh, you poor delicate snowflakes.


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