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Comment by nradov | Hacker News Reader

The blame for the situation lies squarely at the feet of the state and local governments. The federal government didn't force any businesses to close. There is a huge variance between states in pandemic control measures. If businesses are still open in Florida then why should Floridians pay federal income taxes to subsidize closed businesses in California?

And states do have options for funding relief at the state level. For example they could temporarily raise income taxes on the wealthy for the duration of the pandemic. Or issue pandemic bonds.

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>The blame for the situation lies squarely at the feet of the state and local governments. The federal government didn't force any businesses to close.

The state and local government had to act entirely because the federal government had no real plan. Someone is going to fill the decision making vacuum, but it is a problem when the people making the decisions don't have the financial power to make the right decision. The federal government is the only government in the US that had the power to pay people to stay home and experts were telling us that was the right decision 9 months ago.

You appear to be laboring under a misconception. The responsibility to act on public health measures has always been primarily at the state and local levels. Under our federal system, the federal government doesn't even really have legal authority to order lockdown measures. Granted the federal response has been an appalling mix of corruption and incompetence, but the federal role is mostly just advisory anyway.

State governments have the power to pay people to stay home. They might have to shift funding from other areas or raise taxes in order to do so.

The argument isn’t about power in the sense of authority, but power in the sense of having the tools to control the situation.

Where in my comment did I say the federal government should have enacted a national lockdown? My complaint was the lack of a real plan. They left the states to fend for themselves without the level of guidance, coordination, or financial support that was needed for a proper response.

>State governments have the power to pay people to stay home. They might have to shift funding from other areas or raise taxes in order to do so.

Most states are run on a deficit and several states are already near bankruptcy. There simply isn't a capability at the state level to have the type of financial response that is possible at the federal level with its ability to print money.

> Most states are run on a deficit

This is not true. All the states except Vermont have a legal requirement of a balanced budget.

https://www.ncsl.org/research/fiscal-policy/state-balanced-b...

I phrased that poorly. However there is also a difference between what these rules require and what you are stating. A proposed balanced budget isn't the same as a balanced budget in practice. And to quote your linked article:

>State balanced budget requirements in practice refer to operating budgets and not to capital budgets. Operating budgets include annual expenditures--such items as salaries and wages, aid to local governments, health and welfare benefits, and other expenditures that are repeated from year to year. State capital expenditure, mainly for land, highways, and buildings, is largely financed by debt

It is much easier to balance the budget when you ignore all those capital expenses.

Also there are other complexities involved. You can look at what happened in Illinois a few years back as an example. They basically didn't have an official state budget for multiple years. That didn't stop them from racking up costs and debt. It contributed to a debt crisis that the state is still trying to claw its way out of.

>Most states are run on a deficit and several states are already near bankruptcy.

The first isn't true at all. Most US States are forbidden to run deficits[0].

Which is why many states are already cutting services and laying off workers.

What's more, there are significant restrictions in most states on when and how they can raise money by issuing debt obligations (bonds).

With sales and income tax revenues plummeting in many states, that leaves them with few options other than cutting services, laying off workers and slashing public programs.

Without Federal assistance, things are going to get much worse before they get better.

[0] https://www.taxpolicycenter.org/briefing-book/what-are-state...

> State governments have the power to pay people to stay home. They might have to shift funding from other areas or raise taxes in order to do so.

But they don't have the money to do so. Plans like that require deficit spending, which the federal government can do but the states can't.

Your alternative suggestions are not serious ideas. Do you really think the states could find the money to pay people to stay home by levying taxes on basically those same payments?

I am seriously suggesting that if states want to pay people to stay home they should find the money by cutting other spending, selling assets, raising taxes on the wealthy (households with an income over about $200K who didn't receive a stimulus payment in the first place), and issuing general obligation bonds. Some states have legal restrictions on those things but those are entirely self imposed and can be removed without any federal intervention. It's time to make tough decisions and decide what to prioritize rather than pretending we can have it all and letting future generations deal with the consequences.

There's not dire future consequences to deficit spending during a demand shock. Austerity is the wrong response to such situations.

> I am seriously suggesting that if states want to pay people to stay home they should find the money by cutting other spending, selling assets, raising taxes on the wealthy (households with an income over about $200K who didn't receive a stimulus payment in the first place), and issuing general obligation bonds.

So, basically, you think they should do things like finance their house with their credit card (general obligation bonds) instead of taking out a mortgage (federal deficit spending)? And what's your reason for that?

Honestly, this seems more like you're opposed to stay at home orders directly, but expressing that opposition indirectly by demanding arbitrary (unreasonable) policy restrictions to make them seems less desirable by making their implementation unnecessarily painful and difficult.

Florida is already a taker state instead of a giver. Why should we give them more if they can just tax themselves for the difference?

https://rockinst.org/issue-area/new-yorks-balance-of-payment...

Seriously, OP's argument makes no sense. It's just distracting from the issue of the federal government's failures. This constant distraction is part of why the government is able to fail so badly without any consequences.

> why should Floridians pay federal income taxes to subsidize closed businesses in California?

Because Florida benefits immensely from supporting a state which has, if it were a country, the 6th highest GDP in the world.

The economy in Florida would be heavily affected if California left the union.

Your question is basically like asking "why do federations exist?"

No one has seriously suggested seceding from the union. The survival or bankruptcy of some small businesses in California has very little impact on Florida.

Obviously not literally seceding, I am referring to the impact of economic disruption.

"Some small businesses" is a washy phrase with no substance.

I feel like rural areas are going to keep their small businesses alive and well, while city restaurants and service industry will collapse. Seattle and Portland will be Detroit within 2 years. Even after COIVD, that type of devastation would take a decade to recover from, if they had sound leaders. They don't, and it's only going to make it worse.

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