Fed Stimulus Bill Looms Large for Massachusetts
Baker Urges Deal, Calls Senate Debate "Appalling"
3/24/20 3:42 PM
BOSTON, MARCH 24, 2020.....As federal lawmakers and the White House neared agreement Tuesday on a coronavirus economic stimulus package worth nearly $2 trillion, the message from Massachusetts was loud and clear: reach a deal to help workers and industry, and get it done now.
Congress has been under pressure for several days to strike a deal and pass a far-reaching effort to stabilize the American economy, provide financial relief for workers and families, and support a health care system that's bracing for the worst of the coronavirus pandemic. As the crisis has worsened in recent days, Congress was unable to reach a deal as quickly as some hoped and lawmakers traded partisan barbs and pointed fingers.
That hasn't sat well with a lot of people, including Gov. Charlie Baker.
"The last two days, we've all been following closely the developments in Washington, the debate around the economic aid package in the Senate. Well, frankly, it's been appalling. But I can't say I'm surprised," Baker said Tuesday during his daily COVID-19 update press conference.
"I've watched and seen governors and mayors and other elected officials completely shift their focus to the task at hand, without the slightest partisan bend, so I know it's possible, if they choose to, for D.C. to do the same. I think we all hope, and try to be confident, that Congress will get the job done soon because this kind of partisan behavior is simply not an option now."
Baker said it is critical that Congress produce a federal aid package because "state governments, local governments, we have to balance our budgets" and cannot do nearly as much as the federal government to ease the pain the coronavirus pandemic has inflicted upon small businesses.
"In the end, the only entity that can truly spend significantly when there's a downturn in the economy is the federal government and many of the elements of the legislation that's currently stalled were designed to deal with some of the issues associated especially with small businesses and their ability to actually weather this storm," Baker said.
The governor's message to lawmakers like U.S. Sens. Edward Markey and Elizabeth Warren: "Make a deal. Make a deal."
"Remember, the legislation that's currently in front of the Senate went through a whole series of bipartisan -- that means Republican and Democrat -- decision makers over the course of the past two weeks in both the House and the Senate," he said. "I think it's critical that these folks find a way to yes and create some clarity and some certainty -- not just for state government, local government, but for the people of the country who are waiting to see the federal government lead on this issue."
Though Baker did not get into the package's ramifications for the state budget, Sen. Adam Hinds, the co-chair of the Revenue Committee, detailed why the federal stimulus is important to the fiscal health of Massachusetts.
"Don't think for a second the stimulus package debate in DC isn't critical here in MA. We are moving towards an unprecedented hit to revenue as people are laid off & stores close reducing income & sales tax revenue as costs increase (e.g. more use of MassHealth)," Hinds tweeted Tuesday morning. "Federal government emergency support will be critical as we start to lay out plans to manage our spending while grappling with a pandemic and the medical needs that requires. The Fed can borrow while we have a balanced budget requirement at the state level."
Hinds said he is expecting Massachusetts income tax collections -- which account for 58 percent of the state's tax haul -- "will decrease sharply" as layoffs continue. And with the stock market trending down, Hinds said to prepare for capital gains tax revenue to "go through the basement next year." Sales tax revenue, almost a quarter of the state's collections, "will obviously take a hit as well" as shops close, he said.
"We simply don't have our numbers yet, but it's clear this is an unprecedented impact on our budget, vital programs & economy. The fed stimulus is the largest way to offset these challenges in the short-term, and they better dedicate as large a portion as possible to state support," Hinds wrote.
Speaking on the floor of the U.S. Senate just before noon Tuesday, Minority Leader Chuck Schumer of New York said that Senate Democrats are working to make sure significant "money for the states and localities" is included in the final version of a bill.
"They're getting clobbered economically by this crisis," Schumer said of state and municipalities. "They have new expenses and without tax returns being filed till June, much of their income is not going to be there."
The federal tax-filing deadline has been pushed back to July 15 and state officials continue to discuss the idea of moving the state's April 15 deadline.
As Congress has labored to reach an agreement over recent days, the frustration has been mounting among those in the finance world.
"If they don't come together in the next 24 hours, it's a different world for all of us," CNBC host and former hedge fund manager Jim Cramer said Tuesday morning just after his network hosted an interview with U.S. House Speaker Nancy Pelosi.
On CNBC, Pelosi said she is optimistic that a deal can be struck and a bill passed "in the next few hours."
On Monday, Senate Democrats prevented a key vote on a GOP-backed stimulus bill, arguing that it disproportionately helps corporations and does not do enough to benefit families and health care providers. The bill includes stimulus checks for many individual Americans and hundreds of billions of dollars in loan programs for small businesses and various industries.
One sticking point for Democrats has been how the money in that loan fund would be distributed -- by whom, to whom, with what kind of oversight. On CNBC on Tuesday morning, Pelosi said that recent talks included giving oversight of the roughly $500 billion pot to an inspector general's office and a panel of five members of Congress.
"I think we're getting to a good place," the speaker said. "If they stay there."
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