Unmask COVID-19 funding for states

Mainstream media publications are hammering fiscally conservative groups opposed to wasteful spending of tax dollars for accepting temporary financial help in the form of a publicly funded Paycheck Protection Program loan to counter COVID-19 shutdowns.

But will those same entities keep their moral-outrage thermostats turned wide open when it comes to leftist politicians seeking to slide through legislation under the cover of the pandemic to bail out poorly run states?

After all, businesses and nonprofit firms weren’t dragged overnight from growing in a booming economy to the precipice of collapse by their own poor decisions – unlike some states now coveting federal bailouts after decades of mismanagement, including Kentucky, which has suffered from such a malady for decades.

It’s fair to consider such businesses victims of COVID-19’s version of “eminent domain,” government’s property-taking action.

Government is bound by the Constitution’s Fifth Amendment “to pay just compensation to the affected property owners.”

Consider a PPP loan as “compensation for a government taking,” declared Americans for Tax Reform in a statement after being criticized for participating in the PPP.

Taking the approach favored by the Democratic majority in Speaker Nancy Pelosi’s House of Representatives would add $3 trillion to the $3 trillion of COVID-19 emergency funding already out the door, add to our massive $26 trillion debt and undermine the nation’s economic recovery.

Big-government types consider the current pandemic the perfect opportunity to grab emergency funding for long-sought pork-barrel programs which grease America’s slippery spending slope.

As National Right to Work Committee President Mark Mix observed:

“It is under circumstances like these that some of the worst programs ever instituted by Congress were put into place.

”While controversy looms over states regarding forced-mask policies, there should be widespread agreement that masking spending intended to temporarily aid recovery from the pandemic as “mitigating lost revenue” when it’s really a scheme for “unrestricted” dollars to bail out poorly run pension systems and fund programs completely unrelated to COVID-19 is a recipe to multiply the disastrous twin viruses of debt and deficits.

Lee Saunders, president of the 1.3 million-member American Federation of State, County and Municipal Employees union, is demanding Washington send $700 billion in unrestricted funds to bail out state and local governments.

Such irresponsibility creates the worst kind of moral hazard, removing incentives for states like Kentucky to make politically difficult decisions to reform pension-benefits policies and put government retirement systems on a clear path toward eliminating unfunded liabilities.

Congress can improve oversight of such unprecedented federal spending by removing COVID masks from any bill involving aid to state and local governments with the economic health-improving cures of accountability and transparency.

When both cures are implemented, the process is covered from beginning to end.

Congress can help accomplish this by:

• limiting aid for states and localities to expenses directly related to the coronavirus,

• requiring states to promptly publish online how they spend those funds,

• ensuring the total amount of assistance doesn’t exceed expenses incurred directly because of the pandemic,

• emphasizing the temporary nature of this level of spending and

• requiring states to have safeguards in place – like healthy rainy-day funds – to prevent succumbing to the temptation of using COVID-19 funds for non-emergency purposes.

Kentucky’s media outlets could greatly help this cause by laying aside their ideology and committing to fulfilling the government-watchdog role for which they receive special constitutional protections.

They could provide a great service by ensuring dollars sent to our commonwealth actually get spent to ease suffering related to the coronavirus and not the consequences of politicians’ bad spending decisions in past decades.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com and @bipps on Twitter.

The Bluegrass Beacon is a weekly syndicated newspaper column posted on the Bluegrass Institute’s website after being published by newspapers statewide.