Another Flood of Federal Cash: Will We Do the Right Thing?

Vermont is about to receive another tsunami of federal Covid relief. Thanks in part to the diligent “bring home the bacon” efforts of our Congressional delegation, Vermont will be among the top recipients of per capita federal aid. The American Rescue Plan, passed by the U.S. Senate on Saturday, would provide $1.25 billion for Vermont, according to Baconator-in-Chief Pat Leahy. That’s equal to the amount we got from last year’s CARES Act.

And until the last dollar is spent, there is no excuse for any Vermonter to be struggling. That is, if the Scott administration and the Legislature follow one simple rule: Prioritize relief for those hit hardest by the pandemic. Only then should you think about anything else.

Since the pandemic began, the Vermont Foodbank has been overwhelmed. In 2020, it set an all-time record for delivering food to those in need. Total food distribution was 113% higher than in 2019. And the demand has remained high. “The need has not gone down,” Foodbank CEO John Sayles told me.”Our 300 partners around the state all continue to see the heightened levels we’ve seen since last March.”

As long as there are unspent federal dollars, this should not happen. The food banks ought to be empty. Crickets, tumbleweeds, dust on the canned goods.

Sayles offered plenty of praise for steps the state has taken to reduce hunger, and said his request for fiscal year 2022 has gotten a “really positive response.” If that’s true, I asked him, why has the demand stayed at record levels? “So many people have had massive economic disruption,” he said, citing a UVM study that found 50% of Vermonters have had some kind of financial disruption since the pandemic hit.

Full credit to our political leaders for accomplishing much, but we could be doing even more. Food-insecure Vermonters should be at the front of the line, along with others hard hit by the pandemic. They include people with substance use or mental health issues, and small businesses in sectors like small retail, hospitality and tourism.

What shouldn’t happen is that the money gets used for wish-list projects or non-Covid-related issues.

After the CARES Act, Vermont was said to be “awash in money.” How high was the tide?

Vermont received just over $2,000 per person from the $2 trillion coronavirus relief bill, which was signed in March. Only Wyoming, which has a slightly smaller population of 578,000, received more money per capita, at $2,160. For any state with a population of 7 million or above, the per capita payout was only about $388, said Tom Kavet, the economist for the Vermont Legislature.

In January, in assessing Vermont’s economy and state revenues, state economist Jeffrey Carr said this:

“Without the federal money, I’d be declaring a five-alarm fire on Vermont’s economy. We’re all Keynesians now. If we throw enough money at a problem, we can mitigate the damage in the aggregate.”

At the time, the American Rescue Plan was just a twinkle in Joe Biden’s eye. With the Biden bill on the way, “the aggregate” should get even better. But folded into “the aggregate” are winners and losers. Food-insecure Vermonters continue to be losers.

The CARES Act included a minimum allotment per state, which meant that small states like Vermont and Wyoming hit the jackpot. Yes, the pandemic was raging, but the federal money meant we were in pretty good shape, all things considered. The CARES funding alone was equal to 20% of Vermont’s GDP.

That same formula is included in the Senate version of the American Rescue Plan. Even if the House/Senate conference committee opts for the House version, Vermont would still be in line for $850 million.

There’s been a lot of talk about how to spend that money. The governor’s budget would put some of it into tax credits and incentives — which do little to meet present-day needs. To benefit, you must be able to invest the money up front and wait for reimbursement. That doesn’t help businesses on the brink.

Legislative Democrats have floated the idea of using some ARP funds to plug the large and growing shortfall in public sector pension funds. This is a bad idea. First, it wouldn’t solve the long-term pension problem; it’d just postpone the day of reckoning. Second, it wouldn’t relieve people who are struggling right now.

I’m on board with restoring the pension funds without putting all the burden on teachers and state employees. But the real solution is a lasting revenue source, not a one-time infusion that’s more urgently needed elsewhere.

Broadband is also on the legislative wish list. I can accept that, to some degree; the pandemic has brought the issue to the forefront. But again, the neediest come first. According to Sayles, their needs are not diminishing anytime soon. “It takes a while for people to build back from [financial disruption],” he said. “People have been taking on debt. Eventually, we’ll face an eviction crisis when the aid to renters runs out.”

And if the moral imperative isn’t enough, consider the economic multiplier. Aid to those in need is immediately spent on life’s necessities. (The U.S. Department of Agriculture says that the food stamp program has a multiplier effect of 1.79, meaning that every dollar in food stamps generates $1.79 in economic activity. It more than pays for itself, especially when times are tough. Like, for instance, now.)

Let’s get our priorities straight. People in need and struggling businesses first. Everything else, if and only if there’s money left after every Vermonter has enough to eat and a roof over their head.

1 thought on “Another Flood of Federal Cash: Will We Do the Right Thing?

  1. Avram Patt

    Seriously clueless about what broadband connectivity, or lack of it, means for rural and lower income Vermonters, pandemic time and beyond. I mean seriously uninformed.

    Reply

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