Ohio’s Republican attorney general is suing over the federal government’s new pandemic stimulus package, and other red-state attorneys general — including Missouri’s Eric Schmitt — are threatening to follow. They argue that a provision prohibiting states from using those federal funds to offset state tax cuts is unconstitutional. That argument should elicit nothing but slow head-shakes in the courts or anywhere else.
Setting aside the irony that congressional Republicans tried to stop approval of the package in the first place, this money is being provided for the stated purpose of reversing the economic damage of the pandemic — not to fund the GOP’s tax-cut obsession.
The $1.9 trillion package that Congress approved without a single Republican vote provides relief for families, small businesses and, crucially, state and local governments. Those governments have taken budgetary hits from the loss of economic activity and pandemic-related expenses. Perhaps mindful that today’s GOP views tax cuts as a universal cure-all and tends to dismiss the importance of active governmental help, the legislation’s authors wisely included a provision barring states from just using the money to offset tax cuts.
That provision prompted a letter from the Republican attorneys general of 21 states, including Missouri, to Treasury Secretary Janet Yellen expressing concern about the provision and hinting at litigation. The letter claims the condition set on the money “would represent the greatest invasion of state sovereignty by Congress in the history of our Republic.”
That hyperbole overlooks a little thing called the Civil War. It also ignores the fact that federal dollars to states routinely come with strings attached — federal highway funding, for example, has been used to incentivize states to pass drunk-driving laws. For states that don’t like it, there’s a simple solution: Don’t accept the money.
Two days after the letter’s threat to sue over the law, Ohio Attorney General Dave Yost did just that. His suit claims the mandate against using the relief funds for tax cuts forces states to choose between “the badly needed federal funds or their sovereign authority to set state tax policy.” The very phrasing demonstrates the problem with that argument: If the federal relief funds are so “badly needed,” why is the state even contemplating a tax cut? That’s indicative of a state budget that doesn’t need more money at all. Which is it?
Ohio and the other states argue that the restriction is worded so broadly that it could deny the money even to states that had already planned tax cuts before the pandemic. That argument may be true, but it still misses the point: Cutting state taxes while accepting federal financial relief would effectively mean the Treasury is funding those tax cuts. That’s not the purpose for which Democrats (and only Democrats) have made this money available.