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Friend,
This week, Senate Majority Leader Mitch McConnell introduced a greatly scaled back COVID-19 aid package. And while the House included nearly $1 trillion in state and local aid in the HEROES Act, passed back in May, McConnell’s “skinny” bill included $0 in funding for states and 90,000 local governments throughout the U.S.
EPI hosted a webinar with a bipartisan group of the nation’s top economists, titled "The Way Out Through State and Local Aid," to emphasize a critical point: state and local governments need aid to recover from the pandemic, now.
Each economist provided their best argument for why Congress must allocate state and local aid to deal with the economic ramifications of COVID-19. Their consensus answer: States and towns across the country are already hemorrhaging red ink, and substantial federal aid is needed now in order to derail the worsening economic shock brought on by the pandemic. Crucially, these budget shortfalls are not due to irresponsible decision making—rainy day funds had generally been built up for years before the crisis began. But, these budgets just couldn’t absorb the blow to revenues caused by the largest rise in unemployment since the Great Depression.
Check out some highlights from our panel discussion below.
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"The budget crunch is already happening for state and local governments. They’re making plans for next year about what they’re going to do with their budgets. We should give them aid so part of those plans are not just cutting everything in sight in order to make their budgets balance.”
—Josh Bivens, EPI (video)
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“The best time to pass state and local aid was three months ago, when we saw millions of jobs being lost. The second best time is right now. And the reason why is that there was $150 billion given to states, $30 billion given to localities, in the CARES Act, but a lot of that was restricted. And the other thing was that rural areas were left out of it. The $30 billion only went to places that have 500,000 people or more. And so for rural areas, we need state and local aid now so that they get the money, especially given what’s coming up in the fall between schools and further cases.”
—Gbenga Ajilore, Senior Economist for Center for American Progress (video)
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"Clearly, the economy is struggling. We have double-digit unemployment. We’re still down 13 million jobs from the pre-pandemic peak. State and local governments are hemorrhaging red ink, and it’s coast to coast, it’s politically ecumenical. Every state, municipality, is struggling and responding by slashing payrolls. We’re down 1.3 million state and local government jobs since February, slashing programs. There’s no more effective way to help the economy and to help these states and support these jobs than providing federal government aid to state and local governments."
— Mark Zandi, Chief Economist, Moody’s Analytics (video)
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To see more from this important discussion on the urgent need to deliver federal aid to our state and local governments, click here.
These are challenging times. More than ever, EPI's critical research is needed to ensure working families are able to recover from the economic damage caused by COVID-19. If you value EPI’s expert analysis and research, donate today.
Thank you for all you do to fight for an economy that works for all of us, not just the wealthy few,
Eve Tahmincioglu
Director of Communications, Economic Policy Institute
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