Should We Give More Money To The Federal Government Or State Governments

Washington — The coronavirus crunch and the economical devastation it has wrought has opened up a carve up between Democratic governors and Republicans in Congress over federal assistance to states in the next government relief package, with some GOP lawmakers arguing taxpayer dollars should not exist used to rescue states whose fiscal problems have been exacerbated past the pandemic.

The battle over funding for states reached a fever pitch concluding week afterward Senate Bulk Leader Mitch McConnell, a Republican from Kentucky, suggested in an interview with radio host Hugh Hewitt that states who face budget shortfalls should file for bankruptcy rather than seek federal relief. A subsequent press release from McConnell's office highlighting the remarks framed the idea of federal aid flowing to states as "blue state bailouts," since many of those hardest hit are led past Democratic governors.

The annotate prompted a fierce rebuke from New York Governor Andrew Cuomo, a Democrat who said New York contributes far more than to federal coffers than Kentucky, which in plough receives pregnant sums of federal back up.

"New York puts in more than to the federal pot than it takes out. His state takes out more than information technology puts in," Cuomo said during a press conference. "Senator McConnell, who's getting bailed out here? It'southward your state that is living on the money that we generate. Your land is getting bailed out, not my state."

Indeed, a Jan report from the SUNY Rockefeller Institute of Government found that just eight states gave more to the federal government in 2018 than they received in federal spending: New York, New Jersey, Massachusetts, Connecticut, Colorado, Minnesota, Utah and Nebraska. Over the past four years, New York contributed $116.2 billion more to the federal government than information technology got back in federal spending.

The remaining 42 states received more than than they contributed, with Virginia, Maryland, Kentucky, Alabama and Ohio leading.

A map showing the difference betwixt how much money states contribute to federal coffers and federal spending in the country. States in orange contributed more than they received, while states in bluish contributed less. Rockefeller Institute of Government

The disparity between states can in part exist explained by the proportion of high-income earners in a state, who pay more to the government in federal income taxes, according to the Rockefeller Found. Individual income taxes deemed for 53.1% of federal revenues in 2018, followed past payroll taxes, and corporate income and excise taxes.

On the other end of the spectrum, states with high percentages of federal workers and regime facilities, too as with older populations who receive Social Security or Medicare benefits, receive more than from the regime. The Rockefeller Institute found that straight payments to individuals nether federal programs like Social Security and Medicare made up 61.3% of federal expenditures, followed by grants to state and local governments for Medicaid and other safety cyberspace programs. Federal contracts and wages besides dictate which states receive more federal dollars.

The button-and-pull of states contributing to and receiving money from federal coffers has been pushed to the forefront of the legislative debate now that Congress has begun looking toward a fifth package.

Many states are seeing their revenue sources dwindle considering of the coronavirus, which led most governors to issue mandatory-stay-at-home orders and businesses to shutter. At present, they are preparing for desperate budget cuts.

To accost the impairment to state economies and address revenue shortfalls, the National Governors Association has asked lawmakers to provide $500 billion to them, and House Speaker Nancy Pelosi suggested Thursday that figure could well-nigh $i trillion. That federal aid, she said, would be at the heart of the next measure out from Congress.

Merely Republicans take expressed concern that cash-strapped states would use the money to backfill their budgets or address other priorities, similar pension systems.

"Florida has made the tough choices that New York has refused to brand for decades and tin can get through this crunch without a bailout," GOP Senator Rick Scott said in a statement Thursday. "The federal government should continue to reimburse states and local governments for expenses related to coronavirus response. But it's irresponsible and reckless to take money from American taxpayers and employ it to save liberal politicians like Cuomo from the consequences of their poor choices."

Scott has gone head-to-head with Cuomo over aid for states and has said his state should not be responsible for rescuing others where leaders mismanaged budgets and pension funds.

"A crunch of this magnitude hurts everyone regardless of how well they planned, and there is a role for the federal authorities every bit an entity that tin can run deficits when states can't to provide assistance," Jared Walczak, director of land revenue enhancement policy at the Revenue enhancement Foundation, told CBS News. "But yous don't necessarily desire to newspaper over every single choice that states have made over the last decade."

States and local governments received $150 billion, allocated past population, from the $2 trillion economical relief package passed past Congress final month. The CARES Human action as well included $274 billion in emergency funding for states and localities.

While the $150 billion must exist used for economic relief or the public health response tied to the coronavirus crisis, Walczak said the $274 billion in grants tin can provide flexibility to states in a cash crunch.

They tin use federal grants for education, for instance, to costless upward money earmarked for schools in their state budgets.

"States practise have to spend that on public didactics, merely what a lot of states are doing is saying our teaching costs accept not gone up, we tin can fund more than of our pedagogy with federal dollars and pull some of our state dollars abroad and put them somewhere else," Walczak said. "Information technology's pretty fungible. Information technology acts almost as if it'southward a flexible grant to united states."

He predicted a hereafter legislative bundle may follow the model of the CARES Act, where federal assistance to states and localities is population-based.

"It's simpler if you say at that place's money available that will be allocated on the basis of population to states and the recognition that any acquirement stream the country has is going to feel substantial declines," Walczak said.