With states doing better than expected, time to rethink Biden’s $350 billion rescue

The impending budget surplus in California does create a new — better — argument against general federal support for states: Many don’t need it, because they are doing pretty well on their own.

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That’s probably true even when you factor in the additional spending burden all states, including California, are facing because of covid-19, but for which they already received targeted federal assistance from previous relief bills — much of it still unspent.

Biden’s $350 billion request seems high; public-sector layoffs are a concern, but many so far have resulted from school closings rather than budget cuts per se and should end as schools reopen. Government support for the economy generally, through small-business loans and unemployment insurance, has indirectly but significantly helped the states by maintaining the capacity of workers and firms to earn — and pay taxes. The Fed’s zero-interest policy has goosed the stock market, which helped, too.

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