The Untold Story of the Unspent Covid Dollars
It was recently uncovered that back in July, Sen. Joe Manchin outlined his views on the $3.5 trillion social spending package in a memo to Senate Majority Leader Chuck Schumer. In that document, Manchin specified that no funds should be distributed until after all the money from the $1.9 trillion Covid relief bill passed in March was all spent.
While it’s common knowledge that there’s still plenty of Covid money around, it was not clear just how much is still laying in coffers – until now. According to an analysis by the Associated Press, states and localities, who shared a total of $350 billion, have spent an embarrassingly miniscule amount. State governments had spent just 2.5 percent of their initial allotment while large cities spent 8.5 percent. More than half of states and nearly two-thirds of the approximately 90 largest cities reported no spending at all. And that’s just states and cities — the AP did not include counties in their study, which were too numerous.
Among the reasons government officials gave for not spending the funds is that the money arrived too late in their budget cycles, others confessed that they were still trying to figure out how to spend the previous millions they received for Covid relief.
In fact, there is still nearly $10 billion of unspent money left for state, local, territorial and tribal governments from the $150 billion CARES Act — the first relief package passed back in March 2020. Officials are scrambling to spend that money now that the December 31, 2021 deadline is looming.
In California, the state has more than $350 million in unspent funds from that first tranche of aid, while Los Angeles County and the City of Los Angeles each have approximately $150 million to spend. Orange County has more than $47 million of unspent funds.
But if all this idle cash isn’t enough to think twice about more government spending, let’s not forget that we are still reeling from the outright waste and fraud committed against billions of taxpayer dollars.
California’s Employment Development Department admitted that at least $30 billion of employment funds were paid out to criminals. Most recently, the Los Angeles Times reported that the California Housing and Community Development bungled federal relief funds meant to help the homeless. After receiving $316 million under the federal CARES Act to reduce the effect of COVID-19 on unhoused people, the department “did not take critical steps to ensure those funds promptly benefited that population,” the State Auditor Elaine Howle’s office wrote in a report.
Howle’s office warned last August of the potential mishandling of federal COVID-19 relief funds. A year later, in an interview with the Washington Examiner, she said it’s still an issue and some aspects have become more severe.
The final (we hope) Covid relief package signed by Biden stipulates that the funds should be designated by the end of 2024 and the money spent by the end of 2026. If governments are spending Covid relief funds at the same rate they’ve been spending over the last 18 months, and if Schumer actually listens to Manchin, not one penny of the $3.5 trillion would be spent until 2027.
We don’t know what the state of America will be on the nation’s 251st birthday, but as Tennessee Ernie Ford laments in his famous song, the country will be “older and deeper in debt.”
Rowena Itchon is senior vice president of the Pacific Research Institute.