Monday, December 11, 2023

Treasury’s Hidden Stash of Covid Cash; Biden Turns COVID-19 Relief into ‘slush fund’ for State, Local Spending Sprees, and other C-Virus related stories

Photo: Patrick Semansky/Associated Press
WSJ: Treasury’s Hidden Stash of Covid Cash:
If you thought Washington’s pandemic-cash bonanza was behind us, keep an eye on the Treasury Department. The Biden Administration made a quiet move late last month to let states spend up to $90 billion of leftover “emergency” money.
The rule change pushes back the deadline for states to claim cash from the State and Local Fiscal Recovery Funds, a pandemic aid giveaway that President Biden set up through the 2021 American Rescue Plan Act. The law set aside $350 billion for Covid-related spending until the end of 2024. Now Treasury plans to give out unspent cash beyond next year, as long as states say what they’ll spend it on by April.
The change bends the law’s purpose, because by now it’s even less possible to justify new spending as a pandemic response. The economist Paul Winfree has tracked the money that’s already been misspent. “More than $185 million has been approved for projects related to golf courses,” he writes in a new report for the Economic Policy Innovation Center, along with millions more for diversity coordinators and a literal circus. Extending the deadline will keep the party going.
Treasury released the interim final rule on the Friday morning before Thanksgiving, one of many quiet regulatory changes during the Biden Administration. Treasury allowed only a month for public comments to which the agency must respond, and the press has barely mentioned the change.
State revenue overall has exceeded the prepandemic growth trend since late 2020, and states like California set new records for discretionary spending that is now catching up to them. The quick economic recovery means stimulus funds after 2020 have added to blowout spending, rather than replacing lost state revenue as the Administration claims.
Democrats want to make sure the leftover cash is committed before there’s a chance to rescind it. Former House Speaker Kevin McCarthy struck a deal with President Biden to rescind about $30 billion of unspent Covid funds during last spring’s debt-ceiling increase, and Democrats agreed to rescind up to $21 billion of the $80 billion windfall for the Internal Revenue Service in the Inflation Reduction Act. These clawbacks help taxpayers, but progressives want to keep spending as much as possible. --->READ MORE HERE
AP Photo/Andrew Harnik
Biden turns COVID-19 relief into ‘slush fund’ for state, local spending sprees:
The Biden administration is giving states and municipalities more flexibility to hoard money from a $100 billion pot of unspent pandemic relief through 2024 after billions have been spent on golf courses, lottery prizes in New Mexico for people vaccinated for COVID-19 and legal services for asylum-seekers in Illinois.
A little-noticed rule from the Treasury Department, published before Thanksgiving, relaxes how states and municipalities must legally obligate money from the $350 billion Coronavirus State and Local Fiscal Recovery Fund by the end of next year. The fund was created as part of the $1.9 trillion American Rescue Plan signed by President Biden in 2021.
The rule change creates an election-year “Bidenomics slush fund,” according to a report by the Economic Policy Innovation Center, a right-leaning think tank. It says the rule change allows state and local governments to count funds as obligated beyond 2024 if they are merely reported to Treasury by April.
“In essence, Treasury is offering a slush fund pathway to state and local governments as a way to ensure at least the covered billions of SLFRF dollars are not left on the table when it could be spent on the salaries of local bureaucrats and other loosely administrative or compliance expenses,” the report said.
A Treasury spokesperson told The Washington Times that the existing deadline for state and local governments put in place by Congress has not changed.“To address grantee questions, Treasury clarified what recipients must do to meet a particular December 2024 cost incurred deadline that was established by Congress,” the spokesperson said.
Based on the most recent data from Treasury, about $90 billion of the original $350 billion appropriation has not been approved through an adopted budget, authors Paul Winfree and Brittany Madni wrote in their report. “This pot would likely be impacted by the Hoarding Rule.”
Further, states and local governments have obligated only 56% of the total appropriation for the $350 billion program. The new rule promises to give them more time and wiggle room to spend the money rather than return it to the federal government, which ran a deficit of about $1.7 trillion in fiscal 2023.
The pot of money was created largely to help state and local governments replace lost tax revenue during the economic downturn of COVID-19 lockdowns. The pandemic’s impact on revenue was not as bad as feared, the report said, partly because of “shifting work from home during the pandemic and rising property values.” It said state and local revenue increased 24% overall from 2020 to 2022 and state rainy day funds doubled during the same period.
A Government Accountability Office report this year found that, as of March 31, states spent $88.2 billion, or 45% of their awards from the recovery fund, and localities spent 38% of their awarded money. The GAO said 14% of localities had not reported to Treasury how they spent their money, as required by law. --->READ MORE HERE
Follow links below to relevant/related stories and resources:

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WSJ: Coronavirus Live Updates

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NEW YORK POST: Coronavirus The Latest

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