While the words may get massaged — the Biden administration has rolled out the coronavirus/stimulus relief package as the “American Rescue Plan” — the numbers capture the imagination: $1.9 trillion.
This is a reach-for-the-stars moment in American history that goes beyond lessening the pain and seeks, in fact, to fix the pain. It puts a vast amount of federal money into many, many pipelines, including the coffers of state and local government, as well as the checking accounts of individual citizens.
That money — including $350 billion for state and local governments — started flowing last week.
How this plays out will be of great interest, but some threshold issues must be resolved. Last week a slew of Republican state attorneys general challenged congressionally imposed restrictions on how states may use the stimulus funding.
It’s posturing, to some extent, based on the GOP hope that Democrats have overreached with their vast spending initiative. Come next year’s elections, maybe all this will have moved to a different, happier political place for Republicans — or so goes the logic.
But let’s get to what’s really going on here. Why did Congress impose these restrictions, which bar state and local governments from using the federal funding to directly or indirectly offset new tax cuts?
History, that’s why. Welcome to the confusing, often confounding world of federalism.
Presently, these questions arrive in the context of what Congress demands versus what state and localities prefer.
A similar dynamic, however, plays out within states themselves — including Virginia.
For instance, over the past half century, the General Assembly has periodically sought to make good on its end of support for public education. Historically — even to this day — the funding of Virginia K-12 schools significantly relies upon city or county property taxes.
Beginning in the 1960s, however, with the passage of the state sales tax and, in 1970, approval of a new state constitutional commitment to public school funding, the state has wrestled with what it means to “fully fund” Virginia’s educational standards of quality.
Accordingly, the General Assembly periodically pushes forward in the cause of the schools, approves a big, new appropriation and off that money goes to Virginia cities and counties.
Some gubernatorial candidates have been arguing for such a push next year. Maybe that will spur some serious public discussion. One can hope it’s a debate which produces constructive outcomes.
Only, when the General Assembly does that — when the big state treasury button gets pushed and the money flows out — do Virginia’s localities (who run the schools) actually spend the money on education?
Or do local elected officials sometimes do something else with it, such as cutting the local tax load and celebrating that generosity in their next election bid?
What do you think? It’s been a bone of contention for a long time. That’s why the General Assembly goes to great lengths to make sure its state educational commitments wind up being — in fact — local education commitments.
In such manner — based on its own anxieties — Congress has imposed restrictions on the states for its stimulus plan. It wants the billions sent to states and local governments to address the effects of the pandemic — for summer school costs, burdens endured by local health systems, preparations for future viral outbreaks — and not be used in some politically self-serving scheme to finance state tax cuts.
May Congress impose such limits on the states?
Or do the Republican attorneys general have a valid argument, that this represents “the greatest invasion of state sovereignty by Congress in the history of our republic,” as the lawsuit contends.
The court system will have a hand in deciding that outcome. Nevertheless, it may be an opportunity better understand federalism, a much neglected, often tedious subject.
In the meantime, as the courts determine who gets to spend what money and how, no one should forget that there are almost 10 million fewer workers employed today than prior to the pandemic. That’s no abstraction.