Red States Can't Use COVID Relief To Cut Taxes? Well F*ck A Duck!
Just to prove that no good deed goes unpunished, 21 Republican state attorneys general have sent a very strongly worded letter to the Biden administration to complain about the $350 billion in funding for state and local governments included in the American Rescue Plan. A line in the law prohibits states from using the aid to cut taxes, and since tax cuts are the cure for a bad economy, a good economy, and the heartbreak of psoriasis, they demand an explanation.
The Washington Post reports that the letter to Treasury Secretary Janet Yellen complains the clause is an "unprecedented and unconstitutional" restriction on how states can govern themselves, and if the Republican AGs don't get what they want, they'll hold their breath until they drown in Grover Norquist's bathtub. Or at least they'll sue.
Congress included the restriction to underline its intention that the funds be used to help state, local, and tribal governments meet payroll for frontline workers and to deal with the pandemic, not to enable measures that would cut state revenues. But GOP leaders have been crying "that's not fair!" because maybe some states are actually doing so well, even during the recession caused by the pandemic, that they were planning to go ahead with "tax relief with or without the prospect of COVID-19 relief funds." Says the Post,
The attorneys general from Arizona, Georgia, West Virginia and 18 other states called on the Biden administration to make it clear that they can proceed with some of their plans to cut taxes, including those that predate the stimulus. [...] Otherwise, they said, the relief law "would represent the greatest invasion of state sovereignty by Congress in the history of our Republic" — and they threatened to take "appropriate additional action" in response.
The greatest invasion of state sovereignty in history, huh? Like, worse than ending slavery, the creation of the income tax, the Civil Rights Act, or the Voting Rights Act? We seem to remember a lot of "state sovereignty" squawking about those, too! Good to see the recession hasn't left the red states short on hyperbole.
The Post found an unnamed "White House official" who said in a statement that Congress was simply acting within its authority when it put conditions on the relief spending, and that
the law "does not say that states cannot cut taxes at all." Rather, the official said, it "simply instructs them not to use that money to offset net revenues lost if the state chooses to cut taxes."
"So if a state does cut taxes without replacing that revenue in some other way, then the state must pay back to the federal government pandemic relief funds up to the amount of the lost revenue," the official added.
The story correctly notes that while congressional Republicans have griped, falsely, that the aid for state and local governments would only help Democratic-run states, the bill actually had "bipartisan support from mayors, county leaders and governors," which suggests that national Republicans have no goddamned idea how badly the recession is actually hurting the people they allegedly represent. And while the GOP is threatening to sue over the limits on tax cuts, they don't seem to have noticed that the funds are also not allowed to go toward any state's public employee pension obligations, which was the main reason the GOP claimed it was fighting state and local aid since shortly after the passage of the CARES Act last year.
A dozen or so Republican states say they've seen "better-than-expected" revenues in the last year, the Post reports, including "Mississippi, Montana, South Carolina, West Virginia and Arkansas," where GOP leaders would very much like to cut income taxes, because apparently everyone in those states is doing just ducky during the pandemic. Some other red states are looking for more limited tax cuts; Idaho would like to cut property taxes; and New Hampshire wants to cut business taxes. What a tragedy if the relief plan gets in the way of plans in those states!
But then there's stuff like this, which sounds to us like a stretch, although as we frequently note, Yr Wonkette is not a lawyer:
Even a bipartisan attempt to approve rebates for low-income families in Maryland threatens to imperil local governments' ability to take advantage of a key portion of the relief package under a strict reading of the stimulus law.
Now, the letter to Yellen may also just be an exercise in Republican chest-thumping. The state AGs demand that Yellen clarify her plans by March 23, and as we noted the first time we heard Republicans griping about the restrictions, Yellen and her Treasury boffins are still formulating those rules. There's no reason Yellen would delay rolling them out, since the whole idea is to get help out quickly, so even without the letter, the precise guidelines should indeed be out soon.
Then, once Treasury releases the rules, Republicans can get back to whining about how unfair they are to poor burdened rich people.
Update: And now Ohio's AG has gone and sued over exactly that!
[WaPo / Update: Cleveland.com]
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