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Schumer pulls last minute gambit to keep Republicans from appropriating relief funds

Schumer pulls last minute gambit to keep Republicans from appropriating relief funds

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While Senate Majority Leader Chuck Schumer (D-NY) often gets flack from progressives as the type of corporatist, establishment Democrat who is too moderate to fight GOP treachery effectively, he must be given credit for a last-minute addition to President Biden’s American Rescue Plan that has Republicans in GOP-controlled state governments fuming at having their dastardly plans foiled by Schumer’s clever foresight.

At the last minute, right before the final draft of the bill was completed, the New York senator slipped in a provision aimed at undermining any plans that these local politicians may have had to use the money that the bill funnels to state and municipal governments designed to help with COVID-related revenue shortfalls to instead help subsidize further tax cuts for the wealthy residents of their states.

“Money from COVID relief needs to go to helping every day Americans get through the pandemic, not paying for tax cuts for the rich,” Schumer said in a statement to the online news outlet The Daily Poster. “The American Rescue Plan explicitly prohibits states from using emergency COVID relief dollars to fund frivolous tax cuts. Governors should use this money to maintain public health and social assistance programs to fight the pandemic, and keep millions of other essential employees on the job and working for our communities.”

Schumer’s move indicates that Democrats have learned a trick or two since the last economic bailout package that they were forced to pass in 2009 after the GOP financial mismanagement debacle of the George W. Bush presidency tanked the economy.

Having had cold water thrown on their fever dreams of even more tax cuts for wealthy billionaires, Republicans are now moaning loudly about the prohibition and are desperately trying to repeal the provision.

According to Newsweek:

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“West Virginia and Mississippi already had legislation in the works to end their state income taxes altogether, while Iowa is considering a phase-out of its inheritance tax. Florida lawmakers, meanwhile, were hoping to use the federal stimulus to subsidize corporate tax cuts.”

Now the GOP in those states must make a choice: go forward with those tax-cutting plans and forgo any federal aid while also losing the revenue that the taxes would have garnered or drop their plans that would only benefit a small portion of their citizens.

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“‘Basically any tax cut done at the state level has doubled in cost,’ said Carl Davis, research director at the Institute on Taxation and Economic Policy. For example, if a state enacts a $50 million tax cut, it will lose $50 million in the revenue it won’t collect and another $50 million in federal aid.”

Economists point to the debacle that happened in Kansas in the aftermath of the last financial crisis when the conservative Republican governor and statehouse slashed taxes on the wealthy and on corporations while simultaneously cutting funding for public education and infrastructure.

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The resulting budget crisis tanked the ratings for Kansas’s state bonds and raised their borrowing costs as the predicted trickle-down never materialized.

Moreover, the cuts to education were so draconian that the outcry from the state’s citizens forced the legislature to repeal the tax cuts over Governor Sam Brownback’s objections.

Kudos to Majority Leader Schumer for his ability to learn from past strategic mistakes in dealing with crafty and self-interested GOP politicians.

With billionaires adding significantly to their net worth during the pandemic while the working classes suffered severe economic setbacks, all the money being spent on the American Rescue Plan needs to go to those who need it most, not those who have a more than comfortable nest egg to see them through these hard times.

Follow Vinnie Longobardo on Twitter. 

Original reporting by Julia Rock, The Daily Poster at Newsweek.

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