Biden Gives More Unspent Pandemic Money To States

After spending billions on things like COVID-19 vaccine lottery prizes in New Mexico and legal services for asylum-seekers in Illinois, Biden is affording states and municipalities more leeway to hoard funds from a $100 billion fund of unused pandemic relief until 2024.

Published just before Thanksgiving, a little-noticed order from the Treasury Department eases the legal obligations that states and municipalities must meet by the end of next year regarding the $350 billion Coronavirus State and Local Fiscal Recovery Fund. In 2021, President Biden signed the nearly 2 trillion dollar American Rescue Plan, which included the creation of the fund.

In a paper, the right-leaning Economic Policy Innovation Center said that the regulation change established a “Bidenomics slush fund” that would be accessed during election years. According to the regulation amendment, as long as the payments are submitted to the Treasury by April, state and local governments may be counted as committed even beyond 2024.

The current deadline that Congress has set for state and local governments remains unchanged, according to a Treasury spokeswoman who talked with The Washington Times.

According to the most current statistics from the Treasury, the authors Paul Winfree and Brittany Madni said in their paper that an enacted budget has not authorized around $90 billion out of the initial $350 billion authorization. “The Hoarding Rule would probably affect this pot.”

There is a $350 billion initiative, yet only 56% of that amount has been committed by state and municipal governments. Instead of sending the funds back to the federal government—which had a deficit of almost $1.7 trillion in fiscal 2023—the new law gives them greater leeway and time to spend.

The primary goal of allocating this sum was to assist state and local governments in making up for the income they lost due to the COVID-19 lockdowns’ economic impact. The research said that “moving work from home during the epidemic and growing property prices” contributed to the pandemic’s mitigation of its expected negative effect on income. According to the report, state and municipal revenues surged 24% between 2020 and 2022, while state rainy-day reserves more than quadrupled simultaneously.

The recovery fund “is funneling taxpayer money into projects that have limited connections (at best) to the COVID-19 pandemic,” according to Mr. Winfree and Ms. Madni, who were both former budget officials in the Trump administration and current president and executive vice president of the Economic Policy Innovation Center, respectively.

The new rule will clarify how sub-recipients will be subject to the obligation deadline.

At first, the treasury characterized the expenditure as “an order made for goods and services and entering into contracts, sub-awards, and similar activities that demand payment.” The deadline for the funds to be spent by the department is December 31, 2026.