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.”
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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.”
