After failing to stop the $1.9 trillion COVID-19 stimulus package from becoming law, Republicans are blasting the plan as a bailout for poorly managed Democratic states and cities.
A key piece of the criticism has been the stipulation that $350 billion be siphoned off for state and local governments, money Democrats who pushed through the legislation with no Republican support argue will blunt the pandemic’s fiscal fallout.
Rep. Mike Bost, a Republican from Murphysboro in southwestern Illinois, joined the national GOP chorus when in a WJPF radio interview he claimed there was nothing in the legislation limiting how states can spend the money.
"Where are the checks and balances in the issuing of these funds? Where is it that in there it says, it can only be used for A, B, C and D? It does not," Bost said. "And that’s the problem."
The law — dubbed the "American Rescue Plan" by President Joe Biden — is more flexible than previous aid packages in how money can be spent, experts told us. But it’s also not a free-for-all.
More leeway, but some limitsA relief bill passed last year, when Republicans controlled the White House and the U.S. Congress, earmarked $150 billion in state and local government aid for expenses tied only to the public health emergency. After last year’s law — dubbed the CARES Act — took effect, guidance from the federal Department of the Treasury explained funds could go beyond direct health care spending to cover items such as payroll for first responders and costs associated with caring for the homeless community.
The text of the latest aid package sets more flexible guidelines, allowing state and local governments to spend on the pandemic’s "negative economic impacts." According to the language of the new law, funds can go toward increased pay for essential workers, preventing cuts to government services, and making investments in water, sewer, or broadband infrastructure as well. And unlike the 2020 CARES Act, it covers costs incurred through 2024.
Bost spokesperson Alex Naughton, responding to our inquiry in an email, said the Democrats’ package lacks "any meaningful guardrails" for how state and local governments can spend the funds.
"They so loosely defined the terms of what’s an acceptable use of funds … that literally almost any expense could qualify," Naughton said. "This effectively creates a slush fund to use on whatever they want, as long as they paste a ‘pandemic response’ label on the package first."
Experts agreed the new law provides considerable leeway, but they added that it does set some limits and outlines penalties for states and municipalities if they go beyond the legislation’s parameters.