WASHINGTON (AP) – President Joe Biden entered the White House with a promise to end the dual health and economic crises caused by COVID-19, but $ 1.9 trillion and countless initiatives later is reaching the limits of what Washington can reach out when some state and local governments are unwilling or unable to act.
Six months after the massive bailout plan was passed by Congress, administrative records show that more than $ 550 billion remains to be disbursed. The sum could help provide important economic pillar as the delta variant of the coronavirus continues to pose a threat. In some cases, however, this also leads to frustration as tenant aid, tests and vaccines go unused despite mass campaigns.
Republican critics say the unspent money shows Biden’s aid package was too large and inflationary; The government says the unspent funds will reflect the scope of planning in case the recovery from the pandemic runs into further problems with virus mutations and unexpected economic disruptions. According to the law, about $ 105 billion of state and local aid and more than half of the expanded child tax breaks are yet to be paid out.
“There are some things designed to address immediate hardship and others that allow for a multi-year policy response – these aren’t actual bugs, but functions,” said Gene Sperling, who oversees Biden’s bailout plan. “The fact that a solid portion of these funds can be used over a period of several years is good news to ensure lasting recovery.”
However, some of the backlog comes from bottlenecks – or outright blockades – at the state or local level that are beyond Washington’s control. The scale of the challenge became apparent when Biden recently announced new vaccine requirements for federal employees and employers with 100 or more employees, emphasizing the need for testing and keeping schools open.
“We face a lot of resistance, especially from some Republican governors,” said Biden on Thursday. “The governors of Florida and Texas – they are doing everything they can to undermine the life-saving requirements that I have proposed.”
The Department of Health and Human Services and Centers for Disease Control and Prevention launched Operation Expanded Testing to work with schools, homeless shelters, and care facilities to provide free screening tests to most organizations, and CDC has its technical Expertise – but that doesn’t mean that states take it up.
Iowa and Idaho, for example, have turned down tens of millions of dollars in federal aid to promote virus testing in schools. In Texas and a handful of other GOP-controlled states, officials have decided to prevent schools from conducting contact tracing – for which they have received federal funds – or requiring them to wear masks.
There have been some bright spots, the administration said, including Georgia and Massachusetts, where states have deployed federal funds to keep students safe.
White House officials are frustrated with the slow distribution of funds for some of the programs, but claim that what is left is largely beyond their control.
Large pockets of money flowed through existing channels – for example, expanded tax credits that required relatively minor adjustments by the IRS. But the federal government also had the task of building entirely new initiatives from scratch, with a few carrots or whips to get local officials to join.
Privately, some officials believe the country as a whole had the means to avoid the brunt of the recent Delta wave and its economic impact through vaccinations, robust testing, and economic aid – but not quickly enough to take advantage of it.
The Biden administration can point to clear successes with its aid package. Economic growth has soared this year, with monthly job gains averaging 636,000 and demand exceeding supply for cars, furniture, appliances and other goods. The president and his aides point to projections that suggest US economic growth could be the strongest in four decades.
Still, the Delta variant has slowed economic activity as the hiring fell to just 235,000 additional jobs in August. The slowdown coincided with the elimination of expanded unemployment benefits, which resulted in 8.9 million people losing weekly unemployment benefits and another 2.1 million losing $ 300 per week of additional unemployment benefits.
The delta variant has spread as the means to combat COVID-19 remain unused.
Of the $ 51 billion spent on testing, surveillance, and research and development in Biden’s plan, the government said $ 13.9 billion remains to be distributed and used to combat the Delta variant. Only 10% of the home aid money has gone to states, and aid to renters is so unevenly distributed that the Treasury Department announced on Tuesday that the remaining $ 13 billion would go to “high performing” states and cities.
“That was absolutely too big,” said Marc Goldwein, Senior Vice President of the private committee for a responsible federal budget. “But it was also poorly designed in terms of timing and composition – there were some places where we should have spent more or longer.”
Goldwein said unemployment benefits should have been reduced gradually. Direct checks could have been split into multiple rounds rather than a single payment of $ 1,400 for each eligible person. State and local funds could have been disbursed in conditional tranches.
Administration officials said the government has generally been successful in providing direct payments to individuals, tax credits for children, and forgivable loans to businesses. The roughly $ 400 billion in direct payments all ran out quickly, as did the $ 28.6 billion in aid to restaurants that lost revenue during the pandemic. They determined that the administration will meet or exceed the Congressional Budget Office’s spending projections for this fiscal year.
Routing funds through state and local governments has been more of a challenge. Government officials said the Trump administration left them decent infrastructure for these programs, despite approving around $ 4 trillion in aid prior to Biden’s presidency.
Biden’s government changed guidelines to release rental aid faster to limit evictions, but noted that a contact campaign that coordinated 437 different jurisdictions produced uneven results. Not enough cities were able to replicate the programs in Houston, Philadelphia and Louisville, Kentucky.
But in many cases, the federal government has been willing to give states, counties, and cities a more patient approach with $ 350 billion in direct aid, of which $ 105 billion remains to be distributed.
Even the money paid out has not necessarily been spent. State and local governments have until 2024 to issue them.
“It is too early to judge whether the program has been successful,” said Alan Berube, senior fellow at the Brookings Institution. “The government and Congress want cities to use the funds not only for immediate recovery, but also for inclusive and sustainable recovery.”