The latest wave of Covid-19 cases is prompting many state and local governments to implement further restrictions on indoor dining and other social gatherings. While these public health restrictions are necessary, the slowdown in economic activity also will reduce tax revenues that support vital services. With no progress in Washington on passing a comprehensive relief package, state and local governments will struggle to stay financially afloat. Geoff Mulvihill and Rachel La Corte from the Associated Press have more:
States have used the [CARES Act] money for testing and contact tracing, assisting businesses, helping residents with utility bills and rent and expanding broadband access for students attending school remotely. But they have not generally been allowed to use it for one of their major needs: replacing declining tax revenue to keep regular government services running. … The Center on Budget and Policy Priorities estimates that state, local, territorial and tribal government budgets will be short collectively by $275 billion to $415 billion through June 2022 if they use all their reserve money to help deal with the virus. Moody’s Analytics said that for states alone, the shortfall could range from $196 billion to $396 billion, depending on how bad the virus outbreak gets.
“What if something happens?”
Many middle-class workers — particularly workers of color — have yet to recover from the 2008 Great Recession. Now, the Covid-19 pandemic and federal policymakers’ failure to provide adequate relief is hitting those same workers hard. While it will be years until we understand the true impact of the pandemic on the economic stability of the middle class, a new Brookings Institution report documents how the lives of the middle class have changed through the pandemic:
Even pre-COVID-19, nearly 40% of Americans reported that they were living paycheck to paycheck, to such an extent that 12% could not swing an unexpected expense of $400, with an additional 27% reporting that they would have to rely on loans, credit cards, or selling personal items to do so. In our focus groups in fall 2019, participants across the country described their sense of being “run into the ground,” working jobs that could not keep pace with the rising costs of living and bemoaning the lack of adequate safety nets to protect them in the case of an emergency.
Cancel student loan debt, then fix the system
Americans collectively owe more than $1.7 billion in student loans. President-elect Joe Biden is calling for forgiveness of at least $10,000 per borrower, while more progressive members of Congress want to wipe away at least $50,000. While debt relief is vital to economic recovery, it won’t fix the system that caused student debt to skyrocket in the first place. Kevin Carey of the New York Times’ Upshot blog explains:
The American higher education system is a gigantic debt-producing machine with no one at the controls. Any student attending almost any accredited college can take out a federal loan, and the federal government does not regulate what colleges can charge for tuition. The Department of Education limits the size of federal loans to undergraduates, but not to graduate students. Nor does it limit how much parents can borrow to help send their children to college. So if nothing else changed, the day after any kind of mass loan forgiveness went into effect, the tide of debt would begin rising again. To stem future borrowing, Mr. Biden has proposed a version of the “free college” plan first popularized by Senator Bernie Sanders. The Biden proposal would make two years of community college free; eliminate undergraduate tuition at public universities for students from families earning less than $125,000; and subsidize the cost of historically Black colleges.
The disconnected state Legislature
Louisiana’s legislators voted overwhelmingly to place Constitutional Amendment 5 on the Nov. 3 statewide ballot, which would have allowed manufacturing corporations to negotiate sweetheart property tax deals with local governments. The voters had different ideas, as every single state legislative district overwhelmingly rejected that amendment. In The Times Picayune | The Baton Rouge Advocate, Barbara Kaplinsky of Together Louisiana explains the chasm between our legislators and the people they represent:
Amendment 5 was endorsed by the Louisiana School Board Association, Police Jury Association & Sheriffs Association, in each case without opposition. It then lost in 99% of school board districts, 99% of police juror districts and all 64 parishes where those sheriffs are elected. So, what’s going on with this big disconnect between what voters want and how the people they elect are voting when it comes to corporate welfare? Let’s not complicate it. Lobbyists raise money for elected officials and cultivate relationships with them — with Republicans, Democrats, and Independents. With everybody. The vast majority of those elected officials have been voting with the lobbyists, against their constituents, to win corporate welfare for the lobbyists’ clients.
Number of the Day
1,543 – Number of people currently incarcerated in Louisiana based on non-unanimous jury verdicts, a relic of racist Jim Crow laws. This includes more than 900 people serving life without the possibility of parole. (Source: Promise of Justice initiative via The Times-Picayune | Baton Rouge Advocate)