The Associated Press has found that nearly seven months since Biden’s American Rescue Plan was passed allotting $350 billion in pandemic relief for state and local governments, almost none of it has been spent.
Republicans objected to the funds because they believed they would act as a bailout for states such as Illinois or be used on non-pandemic-related issues. Conservatives wanted to review the spending and make using it meet certain requirements but the Democrats claimed there was no time to fiddle with it because states would run out of money. It appears that was not the case.
It turns out that the money the left claimed was so desperately needed is still sitting unused. Almost none of the funds given to state and local governments has been spent, according to an analysis by the AP.
States have reportedly only spent approximately 2.5 percent of funds allotted to them. Large cities have spent 8.5 percent of their funds to date.
The law gives states until the end of 2024 to make spending commitments and until the end of 2026 to spend the money. Any money not committed or spent by those dates has to be returned to the federal government.
Unbelievably, many of these state and local governments are still trying to figure out how to spend the money. They are permitted to spend it on a wide array of programs, many of which have nothing to do with the pandemic.
Biden signed the law in March. But the Treasury Department didn’t get around to releasing the funds and the spending guidelines until May. By that time, numerous state legislatures had already completed their budget work for the next year. That left governors with no power to spend or allocate the money. A number of states waited several months to even request their share of the money from the federal government.
The AP reported, “Cities sometimes delayed decisions while soliciting suggestions from the public. And some government officials — still trying to figure out how to spend previous rounds of federal pandemic aid — simply didn’t see an urgent need for the additional cash.”
The total of the American Rescue Plan was $1.9 trillion which was intended to help businesses, taxpayers, and state and local governments to weather the pandemic. That followed the $900 billion pandemic relief measure in 2020 and the first stimulus bill worth $2 trillion called the CARES ACT also signed in 2020. That’s almost $5 trillion in pandemic relief. Nearly a trillion dollars from the CARES ACT has not been spent.
According to the Wall Street Journal:
The biggest cache is grants to states, cities and territories, of which $210 billion remains unspent. That’s no surprise given the $500 billion showered on states and cities between the March 2020 Cares Act and President Biden’s follow-up in March 2021.
The bailout came despite a mere 0.2% drop in state revenue from 2019 to 2020, according to the Tax Foundation. Few strings are attached to the funds so state and local lawmakers are taking their time. New York, California and others have passed record budgets while tapping only a portion of their federal aid.
Some of the funds sitting idle are being reallocated to the $1.2 trillion bipartisan infrastructure bill.
The Biden administration appears unconcerned about the funds sitting in limbo. The aid to governments is intended both “to address any crisis needs” and to provide “longer-term firepower to ensure a durable and equitable recovery,” stated Gene Sperling, White House American Rescue Plan coordinator.
“The fact that you can spread your spending out is a feature, not a bug, of the program. It is by design,” Sperling told the AP.
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