Wayne Winegarden Featured in National Interest on Biden Stimulus

Do State and Local Governments Really Need $350 Billion in Aid?: President Biden’s anti-coronavirus stimulus plan has faced some push back.

by Rachel Bucchino

Democrats and the Biden administration have repeatedly pushed for the passage of the American Rescue Plan, a $1.9 trillion stimulus package that they claim will save the United States from the seething coronavirus crisis.

In efforts to swiftly pass the bill, Democrats are working to jam through the proposal via budget reconciliation, a legislative process that wouldn’t require a single Republican vote. . .

. . .

Dr. Wayne Winegarden, a senior fellow in business and economics at the Pacific Research Institute, said that considering the bureau’s data and “the $360 billion already spent, all states are in a better financial position today then before the pandemic. This does not mean that difficult financial trade-offs are necessary, but these are always necessary.”

But of course, some state and local government are still struggling to survive with the impacts of the pandemic. The Urban Institute estimated that twenty-six state governments experienced a revenue decrease, while twenty-one states saw a revenue increase. States like Alaska, Hawaii, Texas and Florida saw a shortfall, due to losses in the oil and gas industries and low rates of tourism. Other states, however, like Idaho, Utah, Colorado and South Dakota actually experienced financial rewards, despite the public health crisis.

“The economic costs from the pandemic-induced shutdowns are undoubtedly still with us. But, the federal government has already allocated an unprecedented amount of money toward the crisis, including to the states, much of it has been wasted,” Winegarden said. “The best thing the federal government can do is stop wasting money on politically motivated programs that are economically unwise—the $600 checks to families based on income, not impacts from the pandemic, exemplify these types of programs. We need to focus on the public goods that the government should be providing and stop with the illusion that federal government spending is a free lunch with no consequences. The more and more we spend, the larger these consequences are becoming.”

. . .

Winegarden also noted that too much spending could lead to severe consequences in the long-term.

“There are very large risks from too much spending,” Winegarden said. “Remember, the federal government does not create resources, it redistributes resources that are created by the private sector. This means that the federal government cannot provide one state resources without taking those resources away from residents from other states. In the current situation, such transfers threaten the vibrancy of the recovery and actually works against the stated policy goal of incentivizing a strong recovery that promotes prosperity.”

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.

Scroll to Top