Heroes Act Gave Millions to California’s Poshest Cities

Coronavirus relief funds are back on the negotiation table, but the three sides have a huge chasm to close.  Speaker Nancy Pelosi originally proposed a $3.4 trillion package, then $2.2 trillion, and has now settled on $900 billion. Treasury Secretary Steve Mnuchin bargained down further to $1.9 trillion, followed by Senate Majority Leader Mitch McConnell, who threw down the gauntlet at $500 billion.

Minority Leader Chuck Schumer, who called McConnell’s bill “emaciated”, hailed the Heroes Act passed by the House as the model for stimulus relief.  It “doesn’t pick and choose who we’re going to help during the greatest health and economic crisis in decades,” he said.

For once, we would have to agree with Senator Schumer.

Auditors at OpenTheBooks.com, a non-profit government spending watchdog, found that $350 million of the coronavirus relief funds were destined for some of America’s poshest cities.  From our perch at Right by the Bay, we couldn’t help but notice that Atherton, a Silicon Valley suburb and America’s #1 richest city according to Bloomberg, would receive $3.7 million in coronavirus “aid” according to OpenTheBooks president Adam Andrzejewski. Atherton, which has an average household income of $525,000, is home to many of California’s most successful tech entrepreneurs and venture capitalists.  Not far from Atherton is Los Altos Hills, which got $4.2 million in “relief.” Home to Google founder Sergey Brin, the median price of a home in Los Altos Hills is $3 million according to OpenTheBooks.

Right by the Bay also spotted on the list the town of Hillsborough, just south of San Francisco.  At a median house price of $5.4 million, its residents include Elon Musk, Jimmy Kimmel, as well as international royalty.  Hillsborough got a $5.7 million bailout.

Then there’s relatively poor Malibu, where the average household income is just $275,670.  They obviously deserve a bigger package at $6.3 million.

Other posh cities that were up for a bailout include Old Greenwich in Connecticut; Palm Beach, Florida; and Scarsdale, New York. “Should the American taxpayers from lower-income areas be subsidizing the lifestyles of the rich and famous?,” Andrzejewski asks.

Supporters of the Heroes Act have claimed again and again that the funds are targeted at the pandemic and opponents are nothing more than Scrooges. But groups like the National Taxpayers Union, who has  made it their job to read the fine print, have uncovered hundreds of millions of dollars earmarked for non-COVID projects. They include a multi-employer pension plan bailout, the elimination of the state and local tax (SALT) deduction limits, $10,000 student loan relief for some private borrowers, $270 million for the National Endowment for Arts and Humanities, $175 million for the Corporation for the Public Broadcasting, and $45 million for the Fish and Wildlife Service.

The question is do states really need $2 trillion in relief?  I suspect the needed funding is closer to McConnell’s number than Pelosi’s.  Even Gov. Newsom, who was desperately seeking COVID relief funds, is now admitting that California currently has a temporary budget surplus.

With a coronavirus vaccine set to be widely available in the Spring, businesses and unemployed workers need a lifeline now to get them through these winter months as states and localities impose tougher restrictions as COVID-19 cases climb. Lawmakers could get one step closer to an agreement by dropping the subsidies for the rich and famous.

Rowena Itchon is senior vice president of the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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