- - Tuesday, May 11, 2021

This month the Biden administration will start doling out $350 billion to state and local governments even though there’s evidence the states don’t need the funds.

California is flush with cash, anticipating a $75.7 billion budget surplus, as it reaped taxpayer funds from booming Silicon Valley firms and residents — one of the few sectors in the U.S. economy which actually benefited from the coronavirus lockdown.

Embattled Democratic Gov. Gavin Newsom, who is headed for a recall, is using the cash to send $600 checks to households making up to $75,000 and an additional $500 to families if they have children. It’s a blatant vote buying effort, assisted by the Biden administration. In addition to its surplus, California is set to receive $27 billion in federal funds as part of coronavirus relief.

New York Gov. Andrew Cuomo has refused to renegotiate his state’s union contracts or cut spending during the pandemic and recently warned of a $15 billion budget deficit. However, last year, his state’s revenues were down only a mere 1.5% from 2019.

Instead of taking fiscal responsibility, Mr. Cuomo is relying on the Biden administration to bail New York out, to the tune of $23.3 billion. The federal funds will most likely be translated into higher New York state union pay, pensions and benefits, to help the scandal-ridden governor win back his constituents.



What’s more, is that Senate Majority Leader Chuck Schumer, who also hails from New York, is pushing for a tax cut for the state’s most wealthy residents. Fox Business reported Tuesday, New York City’s Democratic caucus is “fully committed” to reinstating an unlimited deduction for state and local tax payments dubbed SALT, with Mr. Schumer’s backing.

Their plan is to withhold support for other tax increases within the Biden administration‘s infrastructure plan unless it includes a “full repeal” of the $10,000 limit on the SALT deduction.

This repeal would directly benefit the top 20% of American households ranked by income, as they receive 96% of the benefits of the policy change, according to an analysis by the Urban-Brookings Tax Policy Center. The top 1% of households with the highest incomes would receive 54% of the benefit and pay on average $36,000 less in federal income taxes, the group estimated.

It’s a nice way to keep the state’s richest residents happy, most all of whom live in New York City, while handing out increased benefits to its blue-collar union workers.

There’s little doubt lawmakers in California will be pushing for the same repeal, after all, they too need a carrot to keep their richest constituents content. New York and California have seen a mass exodus from their states during the pandemic, both losing House seats in the latest Census.

There’s also little doubt the Biden administration won’t do everything in its power to prop up these two blue behemoths and their Democratic governors. It’s already considering increased enforcement at the Internal Revenue Service as a way to pay for reinstating the full SALT deduction.

Democrats are good at protecting their own.

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