The GOP will ‘defund the police’ if state and local governments are not bailed out

So much bullshit comes out of the Trump White House every day that I’m going to need a bigger shovel to dig out and try to explain what is actually going on.

The latest is a complex innovative policy initiative that, in my opinion, is badly branded by criminal justice reformers: “defund the police.” Could you possibly make it any easier for a racist demagogue like Donald Trump to scare the geriatric old white shut-ins who watch the white nationalist hosts on Fox News aka Trump TV all day long?

Pro Tip: rebrand this innovative policy initiative, do it now, before you lose the momentum of this moment.

I will discuss this policy initiative in a later post, but for the moment I want to focus on the hypocrisy of the racist-in-chief in the White House and his sycophant cult followers in the Party of Trump.

In a meeting with law enforcement officials on Monday, President Trump said he opposes any defunding or dismantling of police departments, reducing complex public policy to a simple bumper sticker slogan, as Republicans have always done. Trump Rebuffs Protests Over Systemic Racism and Calls Police ‘Great People’.

Here’s a fun fact: If the U.S. Senate does not act on the House bill, House Passes $3 Trillion Coronavirus Relief Bill That Has Dim Future in The Senate (May 15), to bail out state and local government budgets hammered by a loss of tax revenues from the coronavirus pandemic lockdown before the end of July, it is going to be President Trump and his Republican allies in the Senate who will “defund the police” – as well as fire departments, public sanitation, public health, public transportation, and every other essential government service.

State and local government budgets have taken such a severe economic hit that they will have no other option but to make draconian budget cuts to essential government services in order to balance their budgets without a federal bailout from Congress.

On Friday, Trump used a flawed unemployment report showing showing some two million jobs returned to the economy as a reason to launch his Russian-style dezinformatsiya campaign ad, “The great American comeback has begun”. Actually, A ‘misclassification error’ made the May unemployment rate look better than it is: “The special note said that if this “misclassification error” had not occurred, the “overall unemployment rate would have been about 3 percentage points higher than reported,” meaning the unemployment rate would be about 16.3 percent for May.” Just to be clear, this is depression-level unemployment. Nothing to celebrate.

For those of you keeping score at home, as I do, the longest economic expansion in American history, the post-Great Recession “Obama Recovery” that Donald Trump has been living off and trying to claim as his own for three years, officially ended in February. U.S. economy officially went into a recession in February. The media calls it a recession because they expect it to be short-lived, but the extraordinary numbers fit the textbook definition of a depression, the “Trump depression.”

Fun Fact: for the last 40 years, every recession has begun with a Republican president and ended under a Democratic president’s watch.

Nevertheless, Trump and his sycophant cult followers in the Party of Trump are sticking with the flawed unemployment report as a reason to do nothing to bail out state and local governments. “That’s our story and we’re sticking to it.”

The New York Times reported, before the error in the unemployment report became known, the Falling Jobless Rate Could Imperil Aid Underpinning the Recovery (excerpt):

The surprise news that the economy added 2.5 million jobs in May, with unemployment dropping to 13.3 percent [it didn’t], emboldened congressional Republicans who have been reluctant to extend expensive jobless benefits and small-business loans. Many economists, in stark contrast, said the rebound was predicated on federal aid and pleaded with Congress not to relent on spending that has helped keep workers employed and bolstered consumer spending amid a swift and steep recession.

Republicans have acknowledged that some sort of legislation addressing the impact of the pandemic is likely. But the numbers released Friday, aides said, vindicated their reluctance to pursue another large, sweeping package. Instead, lawmakers are looking to a more limited measure that would include new spending and focus on reopening state economies.

“As Senate Republicans have made clear for weeks, future efforts must be laser-focused on helping schools reopen safely in the fall, helping American workers continue to get back on the job, and helping employers reopen and grow,” Senator Mitch McConnell of Kentucky, the majority leader, said in a statement.

* * *

Many Republicans took the jobs report as evidence that the economy was roaring back as states reopen and was unlikely to need another large dose of stimulus.

“Despite being told by experts and naysayers the opposite would happen, America’s unemployment rate fell and our economy is adding jobs by the millions,” said Senator Kevin Cramer, Republican of North Dakota. “There’s more work to be done, but the recovery begins today.”

The official Twitter account for Senate Republicans posted a triumphant video with the message “Weeee’re baaaack!!!” on Friday afternoon and a Senate Finance Committee spokesman said the numbers were a sign that Congress “should not rush to pass expensive legislation paid for with more debt.”

* * *

Democrats, who have pushed for hundreds of billions of dollars in state and local aid in a bill the House passed last month, seized on the jobs report to urge more spending, pointing to it as the reason for the nascent rebound.

“The May jobs report shows that decisive action by Congress to support small businesses and workers can make a strong difference in our economy,” Speaker Nancy Pelosi of California said in a statement. “But with more than 100,000 Americans tragically dead, 21 million still out of work and state and local budgets collapsing, now is the worst possible moment to take our foot off the gas.”

Roll Call reports, GOP renews ‘go slow’ approach on virus aid after jobs report:

Some top Republicans see more reasons to pump the brakes on efforts to pass another multi-trillion-dollar pandemic relief package after Friday’s surprisingly positive jobs numbers. (The surprise is that anyone sees this number as “positive”).

Senate Majority Leader Mitch McConnell, who panned the House measure last month as a “liberal wish list,” said Friday the new economic numbers make the case for more narrowly targeted relief.

“We must keep the wind in our sails, not slam the brakes with left-wing policies that would make rehiring even harder and recovery even more challenging,” McConnell said in a statement.

* * *

Senate Minority Leader Charles E. Schumer said the positive jobs report was no reason to ease up on relief for an economy that has been battered by the COVID-19 pandemic.

“With nearly 20M people out of work and unemployment among African Americans increasing, now’s not the time to be complacent or take a victory lap,” Schumer tweeted. “Senate GOP must stop sitting on their hands. We need to act!”

First of all, Stephen Moore and his sidekick Arthur Laffer are fucking idiots whom no one in their right mind should ever pay any attention. They have caused substantial damage to this country with their faith based supply-side “trickle down” voo-doo economics over the past forty years.

But What Would Happen If Congress Lets The States Go Broke? (excerpt):

Trump has repeatedly suggested that blue-state governors mismanaged their finances and don’t deserve a bailout. Senate Majority Leader Mitch McConnell, meanwhile, made headlines last month when he suggested that states should simply file for bankruptcy if they run out of money.

But experts think that doing nothing could be even more costly in the long run than bailing the states out. Without a lifeline from the federal government, states would have no choice but to start slashing budgets and raising taxes.

Recessions are never easy on state finances, since states rely heavily on tax revenue — whether it’s income tax, sales tax or property tax — and all of those sources of income tend to fall when people lose their jobs or stop buying luxuries. And because states generally have to balance their budgets — unlike the federal government, they can’t go into massive debt during a financial downturn and promise to pay it back later — they have to make up that missing revenue in other ways. In the aftermath of the 2008 financial crisis, many states took a hatchet to higher education funding and reduced their spending on K-12 education, infrastructure, local governments and their own government workforce — and raised taxes.

Arizona did all of this but the latter. Instead, Republicans enacted a massive phased-in corporate welfare tax cut on top of their draconian budget cuts. There was a temporary one cent education tax for a brief period of time, which Republicans opposed extending.

And states had barely recovered from the last recession when the COVID-19 crisis arrived. The Great Recession technically ended in 2009, but according to an analysis by the Pew Charitable Trusts published last year, the slowness of the recovery meant that state tax revenues didn’t return to their pre-recession levels until 2013, adjusting for inflation — much longer than in the previous two recessions. Over this period, states lost an estimated $283 billion in tax revenue. “It was kind of like falling off a cliff and then walking up a ramp,” said Donald Boyd, co-director of the Project on State and Local Government Finance at the University of Albany.

Arizona had yet to return to its post-Great Recession status earlier this year, prior to the coronavirus pandemic devastating state tax revenues. Arizona’s GOP leaders have no serious plans to make up for the ‘lost decade’ of budget cuts.

This meant that even by the time state revenues had recovered, it took longer for dollars to start flowing toward education or infrastructure. States did put more money into their rainy day funds, which they can draw on during emergencies, in case another recession hit. But that prudent instinct left them with even less cash to spend on other things. By 2018, according to Pew, nearly half of the states were still spending less money than they were a decade earlier. State funding for higher education was down 13 percent, and state infrastructure spending as a share of GDP was at its lowest level in more than 50 years.

* * *

And now, states are facing an even more devastating budget crisis. There is, of course, a huge amount of uncertainty about how long the COVID-19 pandemic will last, and some states are already beginning the process of reopening, which could bring lost tax money back into their coffers. But the long-term outlook still looks bleak. Analysts at the financial services company Moody’s gamed out a few scenarios in April — including one that was categorized as “severe” but looks more and more like our current reality — and found that states could see a shortfall of $172 billion over the next 15 months.

That’s because in addition to a huge decline in tax revenue, states are facing new, unexpected costs. Earlier relief bills did provide money, including $150 billion from the CARES Act, for the states to use to offset spending in response to the coronavirus, as well as some additional money for Medicaid. But there hasn’t been any federal money directed at the state-level economic impact of the coronavirus crisis, and even the money that’s tied to health costs likely isn’t enough to cover the huge influx of people who have lost their jobs and employer-sponsored health care and now qualify for Medicaid. The 36 states that expanded Medicaid under the Affordable Care Act are facing a particularly large surge of new recipients, since it’s now especially easy for newly unemployed people to get covered.

It will be very, very difficult for states to pay for all of these expenses without cutting costs or raising taxes, even if they drain their rainy-day funds. According to analysis by Moody’s, only five states have the reserves they’d need to fully float through a severe recession caused by COVID-19. Most states would need to fill gaps of at least 5 percent.

* * *

The trouble is that because states never returned to their pre-recession levels of spending, it will be even harder to find places to trim fat. Higher education often gets slashed early in a recession, Rosewicz said, but because it now makes up an even slimmer portion of many states’ budgets, it’s harder to reap significant savings by making cuts — especially since universities are simultaneously facing potentially large drop-offs in tuition if they can’t reopen in person in the fall. Similarly, state workforces are smaller now, which means states can’t pocket as much money by laying off or furloughing workers. And with public school teachers already protesting stagnant salaries in many states, significant cuts to K-12 education could be politically dicey.

So tax hikes could also be coming — which would also make it even harder to recover from the recession even after the economy starts to pick up again. “The problem is pretty obvious — raising taxes is going to make consumers less inclined to spend money,” said Raymond Scheppach, a professor of public policy at the University of Virginia. “That will make it even harder to get the economy going again.”

But financial assistance from the federal government could still make a big difference, Scheppach and other experts told me. Studies conducted in the aftermath of the Great Recession suggested that the stimulus funds that were sent to states to help cover Medicaid costs or invest in new infrastructure helped increase employment, and general aid to state governments prevented them from slashing programs and raising taxes when those actions could have hurt the economy even more.

[T]his is another situation, Rosewicz said, where an influx of federal cash would be a good investment, if it prevents states from cutting their budgets to the bone. “Federal aid isn’t the full solution — this is an unprecedented crisis and we don’t even have a good estimate of what the need is, because we don’t know how long it will be going on,” she said. “But significant state tax increases and spending cuts will pull even more money out of the economy, and that will almost certainly prolong the recession, so in that sense federal aid is a really essential tool right now.”

If the Republican Senate and President Trump do not bail out state and local governments for the massive loss of tax revenues directly attributable to the coronavirus pandemic   lockdowns in a failed attempt to stop the spread of the pandemic, it will be Republicans who are directly responsible for the massive state and local budget guts, including “defunding the police.”