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EDITORIAL

States need significant economic stimulus from Washington

Massachusetts and many other states face severe revenue shortfalls without it.

The twin pandemics of COVID-19 and Washington dysfunction have come home to roost.
The twin pandemics of COVID-19 and Washington dysfunction have come home to roost.John Tlumacki/Globe Staff/file

Is there some kind of wonder drug cocktail that will enable a politically driven president to see the economic pain he is causing — pain that is now filtering down to states, including our own?

Yes, the twin pandemics of COVID-19 and Washington dysfunction have come home to roost as Massachusetts officials wrestle with revenue shortfalls this year of anywhere from $3 billion to $5 billion and rising needs — for education, for housing, and for preparing for what most predict will be yet another surge of the virus.

“The future path of the recovery is heavily dependent on the future path of the virus and action on the national level,” Jeffrey Thompson, a vice president and economist at the Federal Reserve Bank of Boston told lawmakers.

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And the only thing more volatile than the economy and the path of the virus is the rantings of Donald Trump.

For awhile, it seemed the president had closed the door on any stimulus before the election. “Well I shut down talks two days ago because they weren’t working out,” Trump said in an interview on Oct. 8 on Fox Business Network. “Now they are starting to work out, we’re starting to have some very productive talks.”

It’s actually Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi who have been doing the talking. But those negotiations until Friday afternoon mostly centered on renewing aid to airlines, which furloughed more than 30,000 workers when their last round of payroll supports expired Oct. 1, and another round of $1,200 stimulus checks that Trump could put his name on.

Federal Reserve Chair Jerome Powell has warned that too little government support “would lead to a weak recovery, creating unnecessary hardship for households and businesses.”

It’s urgent that economic stimulus go beyond checks for individuals and deal with the serious budget crises faced by cities and states that employ millions of Americans and provide critical services in the pandemic.

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The chairmen of the Massachusetts House and Senate Ways and Means Committees are trying to figure out how to deal with the ripple effect of those revenue shortfalls absent federal help to bolster what in January was projected to be a $44.6 billion budget.

House Chair Aaron Michlewitz, addressing a State House hearing, said lack of federal aid “will have a drastic negative impact on the commonwealth’s finances.”

Senate Chair Michael Rodrigues said lawmakers must put forward a budget “as soon as possible,” adding, “In the face of glaring federal dysfunction and an ongoing public health emergency, we have a job to do.”

So along with Secretary of Administration and Finance Michael Heffernan they listened patiently to hours of mostly grim news from economists as they attempt — now three months into the state’s fiscal year — to get a handle on the road ahead. The state has been operating under temporary spending plans that expire at the end of the month.

Even state Revenue Commissioner Geoffrey Snyder had to admit, “there is considerable uncertainty in these forecasts," pointing to "the trajectory of the pandemic, the timing of the development of vaccines and therapeutics, the measures governments have taken to control the pandemic and . . . the uncertainty surrounding potential action at the federal level.”

The most optimistic forecast came from the Center for State Policy Analysis, at Tufts University’s Tisch College, which projected about $29.6 billion in fiscal 2021 revenues — a drop of $1.6 billion below initial estimates.

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The state is fortunate to have some $3.5 billion in its so-called rainy day fund. But draining the fund for basic operational needs — especially without spending cuts — can make bond rating agencies unhappy, state Treasurer Deb Goldberg warned. And anything that impacts the state’s credit rating will cost more down the road.

Massachusetts has plenty of company among states facing difficult decisions.

The National Conference of State Legislatures reported Oct. 6, “State revenue collections across the country plummeted as commerce slowed down to curb the spread of COVID-19. As a result, states face major budget shortfalls.” Their database lists hundreds of budget cuts already made in New York, California, Washington state, Michigan, and Missouri among many other states. Some are across-the-board cuts, others target courts, education, local aid. Some states have begun to tap their rainy day funds, including nearby Connecticut for one.

That pain is being shared from coast to coast. Still a petulant president has too long ignored the obvious — that states need a lot of federal help to overcome the economic effects of a pandemic he did little or nothing to stop. And the people of those states won’t soon forget if the president (and members of his party in lockstep) are to blame for relief that never arrives.


Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.