Writing for FiveThirtyEight.com, Amelia Thomson-DeVeaux has a dire warning for Congress if it fails to bail out the states. “Without a lifeline from the federal government,” she writes, “states would have no choice but to start slashing budgets and raising taxes.”
Meanwhile, governors like Gavin Newsom of California are threatening to shut down first responders, hospitals, and police services if they don’t get a big check from Washington. This is called hostage-taking, and Republicans in Congress would be foolish to pay the ransom. Behind this reasonable-sounding statement is a slew of flawed presumptions. One is that the federal government has some large pot of money to give to states. The federal government can only give states money by taking it from their residents in the first place. Moreover, Uncle Sam is already on tap to borrow at least $4 trillion — so it is in even worse fiscal shape than the states.
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