Faced with a massive revenue shortfall and a second Senate relief package nowhere in sight, localities are expected to continue cutting jobs and vital services in a desperate attempt to balance their budgets. Local governments across the country have already cut upwards of 1.5 million jobs, and without a second federal bailout or alternative funding sources, local governments will likely shed a further 5.3 million jobs by the end of 2021. It would be both morally reprehensible and economically unsound to allow millions of workers to fall into despair as a result of our inaction.
As a result of the COVID crisis, consumer spending is down and unemployment has reached catastrophic levels, diminishing tax revenues and leading local governments and states to fall far short of what’s needed to keep their finances in order. If our states and communities are allowed to fall into insolvency, the millions of people who depend on them for UI, SNAP/WIC, Medicaid, and other crucial programs will suffer. And with estimates suggesting that the combined revenue shortfall of localities could reach up to $1 trillion dollars by the end of 2021, the outlook is bleak.
These dire predictions should be a wake up call to anyone in Congress currently dragging their feet on approving further local aid. State and local government jobs aren’t just some abstract number, they are jobs in essential services we all rely on. State and local governments are the largest employer in the nation, with a combined force of just about 20 million workers. Additionally, people of color make up a significant chunk of public sector employment, and considering that people of color are currently facing the brunt force of the economic and health ramifications of the coronavirus pandemic, keeping these Americans employed should be a top priority.
Further, refusing to save these jobs is tantamount to defunding state and local governments. Many of the public services that are currently at risk of the sharpest cuts are desperately needed for our nation’s recovery. Our public education system needs more money to adapt to distance learning and provide testing and PPE for all students and faculty. Our transit agencies need funding to maintain services for essential workers in a sanitized vehicle. Our unemployment agencies need funding to ensure that claims are processed and delivered in a timely manner — now more than ever.
Mass layoffs and a period of austerity will decimate these public services and put our economy on a longer path to recovery. According to an Economic Policy Institute report, after the Great Recession, the below-average spending by state and local governments delayed a full recovery by four years. We should take heed of our failures to adequately address the last downturn and act now to reduce the severity of the economic slump ahead of us.
Congressional Republicans seem to believe that they can use these budget shortfalls to punish “blue” states and play politics with people’s lives by attempting to pass the blame onto Democratic governors. But this isn’t a blue or red state problem, it’s nationwide. If Congressional Republicans continue to draw a hard line against state and local funds, they will be collectively punishing all Americans to possible prolonged economic depression that could have been easily avoided.
While federal aid is critical, states aren’t entirely dependent on a federal bailout. Like most well-off individuals who make their living on their stock portfolios, I’ve done quite well this year, but my gains pale in comparison to the record-setting earnings made by our country’s 700+ billionaires. The current budget cuts not only threaten the jobs of millions of Americans, but also the programs and services they rely on. So why should America’s wealthiest individuals continue to receive a free pass, while they amass hoards of wealth that could be used for our collective recovery? It’s time wealthy people gave back to the communities that support them, and that starts with state and local governments taxing people like me.
A crisis of this scale requires a solution that matches its gravity. We need a federal bailout from Congress, but we also need to tax the rich to fund our local services — whatever it takes to get out of this hole. The jobs of our sanitation workers, bus drivers, teachers, first responders, and maintenance workers — and the collective health, safety, and progress of the communities they support — are at risk if we don’t act now.
Dr. Karen Seal Stewart is a former certified financial planner, built her wealth in the real estate industry, and is a member of the Patriotic Millionaires.