STUMP » Articles » MoneyPalooza Monstrosity! Let's Check Out the State Aid in the $3 Trillion Bill » 14 May 2020, 21:23

Where Stu & MP spout off about everything.

MoneyPalooza Monstrosity! Let's Check Out the State Aid in the $3 Trillion Bill  

by

14 May 2020, 21:23

Yes, I completely timed my “reactions to state bailout/bankruptcy ideas” posts to end right before Pelosi released her MoneyPalooza Monstrosity. [Ok, I’ve just been busy, and it just ended up that way.]

Frivolous items in a COVID “stimulus” bill

I do want to acknowledge the absurd stuff in the bill, because that’s the fun stuff. But, frankly, that’s what most people will be playing with [if they deal with the bill at all] so let me just give you some places to go look for the fun.

You can start with this tweet with Senator Tom Cotton:

You can read his thread all in one go here.

From David Sirota, he reported on the goodies for lobbyists and dark money groups. [Note: Sirota is a leftist] Once exposed, this was considered so crass, that part was removed.

There are others, but let us stop there. I looked at items, and I don’t have the stomach to comment on every little thing crammed into the bill.

So you’ve got one conservative and one leftist commenting on the bill. I did look around for more, but it does seem nobody is taking Pelosi’s ploy all that seriously. Other things are going on right now that are grabbing more attention.

Serious Parts: Shoveling Money from the Money Machine

Here, let me review some of the coverage of the bill.

Reason: The Next Coronavirus Stimulus Bill Is Here. It’s a $3 Trillion Spending Plan That Bails Out States and the Post Office.

The new $3 trillion Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act) would nearly double the $3.6 trillion in stimulus spending already approved by Congress since mid-March—and that’s after Speaker of the House Nancy Pelosi (D–Calif.) stripped out about $1 trillion in additional spending requested by various lawmakers, Politico reported. The new bill includes another round of stimulus checks for all Americans, funds additional coronavirus testing, and spends billions to bail out states and government agencies straining under pension debt and a collapse of tax revenue due to the coronavirus.

…..
The draft of the bill released Tuesday includes a $25 billion bailout for the cash-strapped U.S. Postal Service, which could lose as much as $13 billion this year and is on a fiscally unsustainable path.

The HEROES Act also contains $540 billion in aid for states and $375 billion for local governments. That’s in addition to the $150 billion relief fund for states established by an earlier stimulus bill.
…..
The HEROES Act also includes some provisions that seem unrelated to the public health and economic crises unleashed by the pandemic, like a provision that would temporarily reinstate the state and local income tax deduction—known as the SALT deduction. That deduction, which primarily benefits wealthy people who live in states and localities with high taxes, was capped by the 2017 federal tax reform law. Restoring the deduction has been on Democratic to-do lists ever since.
……
In some ways, however, the HEROES Act is already looking like a return to some sense of normalcy in Congress—though “normal” is nothing too great when it comes to congressional spending. The bill has already drawn more opposition than the first three rounds of coronavirus stimulus, which passed quickly and with only token opposition, and is likely to be subject to significant negotiation and rewriting before it is passed.

Yes, I said I was going to look at the “serious” parts. The total amount is absurd, some individual parts are absurd, and this monstrosity is a fundamentally unserious bill. I can’t say that Pelosi has shocked me with this, because she hasn’t. What I am minorly surprised at is… well, let’s look at the next piece on the bill.

Pelosi packs in the absurdities, but not all got in

Politico: Pelosi unveils $3 trillion coronavirus relief plan amid squeeze from left and right

Before the measure was released, Pelosi had cautioned members on a Tuesday call that some would be “disappointed” by what was left out of the bill. Pelosi said she and her committee chairs had initially assembled $4 trillion worth of policy proposals, but were forced to winnow it down during final drafting.

Oh, she winnowed it down from $4 trillion to $3 trillion. That was mighty big of Pelosi.

This is also the part that surprised me. Why not throw it in? She threw in the lobbyist stuff to begin with, too. Unless that other $1 trillion was of some extremely nutty stuff. Yeah, probably that.

Democrats acknowledge that their behemoth proposal, whose summary alone is 90 pages, is more of a talking point than legislation that they expect to become law.

Yes, it is full of talking points. I will link to the original bill and the summary in a bit.

The coronavirus relief aid isn’t the House’s only legislative work this week. Pelosi and other top Democrats will also push through a House rules change that will allow proxy voting and remote hearings.

That actually sounds like a good idea to me, and pity they took so long to get there. Indeed, I think it would be great if members of Congress were made to live in their districts while everybody is supposed to be stuck at home. No traveling to DC for you — there’s no reason they actually need to be in person for anything. They’re making that argument for regular people voting, so they can model that behavior themselves.

Official links: original bill and 90-Page Summary of the Bill

Here’s the bill. It is 1815 pages.

Here is the 90 page summary. It is crammed with absurdities, too.

So, there are multiple parts of the bill I’m interested in, but let’s look at my main interest: direct aid to state/local governments.

State and Local Government Bailout Summary

From the summary document:

DIVISION A – Coronavirus Recovery Supplemental Appropriations Act, 2020
….. Title III – Financial Services and General Government

State Fiscal Relief – $500 billion in funding to assist state governments with the fiscal impacts
from the public health emergency caused by the coronavirus.

Local Fiscal Relief – $375 billion in funding to assist local governments with the fiscal impacts
from the public health emergency caused by the coronavirus.

Tribal Fiscal Relief – $20 billion in funding to assist Tribal governments with the fiscal impacts
from the public health emergency caused by the coronavirus.

Fiscal Relief for Territories – $20 billion in funding to assist governments of the Territories
with the fiscal impacts from the public health emergency caused by the coronavirus.

Okay, there are amounts… but no info on how they plan on distributing it. That is, in the summary document. They do provide quite a bit of detail for other items in the summary. HMMMMM.

Let’s go to the original bill to see if we can find how the $500 billion aid to states is to be distributed.

Deciphering legislation: State aid

Okay, in the full bill, look under Division A, Title III, heading titled “CORONAVIRUS STATE FISCAL RELIEF FUND”. The bits you want to look at are (3) and (4).

I will quote the text: [and I’m removing all the line numbers and carriage returns.]

(3) $250,000,000,000 shall be for making initial payments to each of the 50 States and the District of Columbia, of which—

(A) $51,000,000,000 shall be allocated equally between each of the 50 States and the District of Columbia;

(B) $150,000,000,000 shall be allocated as an additional amount to each such entity in an amount which bears the same proportion to the total amount provided under this subparagraph as the relative population of each such entity bears to the total population of all such entities;

© $49,000,000,000 shall be allocated as additional amounts among each of the 50 States and the District of Columbia in an amount which bears the same proportion to the total amount provided under this subparagraph as the relative prevalence of COVID–19 within each such entity bears to the total prevalence of COVID–19 within all such entities: Provided, That the relative prevalence of COVID–19 shall be calculated using the most recent data on the -number of confirmed and probable cases as published on the Internet by the Centers for Disease Control and Prevention for each entity specified in the preceding proviso;

(4) $250,000,000,000 shall be for making an additional payment to each of the 50 States and the District of Columbia, of which—

(A) $51,000,000,000 shall be allocated equally between each of the 50 States and the District of Columbia; and

(B) $199,000,000,000 shall be allocated between each such entity in an additional amount which bears the same proportion to the total amount provided under this subparagraph as the average estimated number of seasonally adjusted unemployed individuals (as measured by the Bureau of Labor Statistics Local Area Unemployment Statistics program) in each such entity over the 3-month period ending in March 2021 bears to the average estimated number of seasonally-adjusted unemployed individuals in all such entities over the same period.

Provided further, That any entity receiving a payment from funds made available under this heading in this Act shall only use such amounts to respond to, mitigate, cover costs or replace foregone revenues not projected on January 31, 2020 stemming from the public health emergency, or its negative economic impacts, with respect to the Coronavirus Disease (COVID–19):

Ugh, that’s enough. There are more items about paying back if they got too much money, but I want to at least analyze the first bit, because the second bit is unmeasurable (in terms of allocation) until 2021.

First Allocation: Semi-Per-Capita

So, first, each state [plus DC] gets $1 billion. [that uses up $51 billion]

Second, $150 billion is divided up by states/DC based on their population. [I will grab this data for that estimation, using the July 2019 estimate.]

Third, $49 billion will be divided up by COVID cases, according to the CDC. [Grabbing from here,, on May 14, 2020 at 7:25pm]

Here are my allocations I’ve calculated based on the data above:

And the top ten states for allocations:

You can check out my spreadsheet to check my math.

Clawback of Funds?

The money is supposed to replace lost revenue… and/or increased costs from COVID. The bill has various language stating that there are clawback features if a state is given too much.

I’m unsure about the increased costs, but we can look at what state tax revenue was before…. and many would be getting, via the above calculations, more than the tax revenue I can see from the Census of State and Local Tax Revenues.

While many states have taken a revenue hit, the bailout amounts are different percentages of estimated 2019 revenue.

So let’s graph it again:

It seems most states are falling into the 20-30% bucket, which probably can be argued to be the lost revenue for 2020.

But some of the smaller states have some pretty high percentages being “replaced”…. do the feds really want to go after South Carolina or New Hampshire to claw back funds?

And I haven’t even looked at the second allocation, which would be paid in 2021.

More parts to come: SALT cap, pension relief, local government relief

I will definitely be looking at the SALT cap (state and local tax deductibility cap for federal income taxes), because that’s a hot-button issue for me.

There are also pension relief portions for multiemployer and single employer private pensions. I may not get to all of that, but small bits.

Finally, I may look at the local government relief information. I mainly wanted to look at the state aid allocation, due to all the Illinois “please bail out our pensions” foo-for-raw.

By the way, in my calculations, Illinois would get $9 billion from the aid bill… not even the $10 billion they asked for their pensions. Ain’t that a kick in the pants.


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