The Economist (2022-02-26) Riva

TheEconomistFebruary26th 2022 UnitedStates 25

havesentorplantosendbonusestogov-
ernmentemployees,suchashealth-care
workers,policeofficersandteachers.Cou-
pledwithpayrises,thisisintendednot
onlytoretainvaluableworkersinatight
labourmarket,butalsotocurryfavour
withvoters.Inspiredbythepopularityof
thedirectpaymentstohouseholdsinthe
caresAct(a$2.2trnfiscalstimuluspassed
underDonaldTrump),GovernorTimWalz
ofMinnesotaispromotinghisproposed
“Walzchecks”,paymentsofupto$350that
wouldbesenttoeveryhouseholdinthe
state.California,IndianaandPennsylva-
niahavesimilarschemesafoot.
Theinfrastructureprojectsthatmany
stategovernmentsareembarkingon,how-
ever,areamixedbag.Onpaper,theTreasu-
ryDepartment’srulesadministeringarpa
allowstatestospendfundsononlythree
typesofphysical infrastructure:broad-
band,sewerageandwater.Stateshaveea-
gerlyallocatedmoneytobroadband,with
anestimated$7.6bnalreadygoingtoit,
thoughAdieTomeroftheBrookingsInsti-
tution,athink-tankinWashington,dc,
cautionsthatfewstateshaverelevantbu-
reaucraticexperience.Theseeffortswill
getafurtherboostthisyearasthe$1.2trn
Infrastructure Investmentand JobsAct
beginsdisbursingmoney,muchofitear-
markedforbroadbandinfrastructure.

arpadiem
Inpractice,however, theabilitytouse
fundsfor“revenuereplacement”hasal-
lowedmanystatepolicymakerstosupport
cherishedpriorities,nomatterhowmis-
guided.ThisishowAlabamajustifiedits
prison construction.Fromruralbroad-
bandtoenvironmentalclean-up,itisnot
hardtothinkofgoodlong-runinvest-
mentsforthestate,butprisonsareapriori-
tyforAlabama’sRepublicans.Iowa’sgover-
nor,KimReynolds,ishanding$11minar-
pafundstoimprovethe“FieldofDreams”,
thebaseballdiamondmadefamousina
filmstarringKevinCostner.
Moreworryingarethenewsocialpro-
grammesandtaxcutsthatseveralstates

areembarkingon.Thesemayproveunsus-

tainable.Coloradowillspend$275monbe-

havioural-health programmesthanksto

arpa,alongwith$13mjusttobuildthebu-

reaucracyforafutureuniversalpre-kin-

dergartenprogramme.NewYork’sgover-

nor,KathyHochul,hasproposed$150min

tuitionassistanceforpart-timestudents.

JaredWalczakoftheTaxFoundation,an-

otherthink-tank,saysnearlyeverystate

has reduced,oriscontemplatingtrim-

ming,itstaxes,afterRepublicansledthe

wayin2021.“ThisistheyearoftheDemo-

cratictaxcut,”hesays,pointingtothema-

nyDemocraticgovernorswhoarepro-

posedslashingthemoreregressivesales

tax.SomeRepublicansaregoingfurther—

Mississippi,thepooreststateinAmerica,

mayrepealitsstateincometaxentirely.

Ifsuchprofligacyiscauseforconcern,

votershardlyseemtonotice.ForRepubli-

cans,sooftentheapostlesofausterity,the

fundshavebeenaboon.Vermont’sgover-

nor,PhilScott,whoisanglingforanother

terminastatethatleansheavilytowards

theDemocrats,isemphasisinghislarge

spendingcommitments.Thenewgover-

norofVirginia,GlennYoungkin,ismoving

toeliminatethestate’sgrocerytaxand

raiseteachers’salaries,keyplanksofhis

winningcampaign.NearlyallRepublican

incumbent governorsfacingre-election

looksafe.OnlyembattledBrianKempof

Georgiaappearsinanydangeroflosing—

heisdesperatelypushingpayrisesfor

stateemployeesandincome-taxrefunds.

Thosesamestateleaderswillprobably

havemovedonbythetimefederalfunds

rundry.Fornow,statesrisksquandering

theopportunitytomakeproductivein-

vestments,andmaybeexposingthem-

selvestoliabilitiesthatwillbitewhenthe

nextrecessioncomes.Withpatternsof

workdisruptedbythepandemic,LauraKa-

lambokidis,Minnesota’schiefeconomist,

warnsstatestoplantheirlong-termspend-

ingwithcaution:“Noneofusfullyunder-

standsyethowthepandemichasperma-

nentlychangedtheeconomy.”

Federallargesse

UnitedStates,totalstatespendingbysource

$trn

Source:NationalAssociation of State Budget Ocers

1

3

1987 21151005200095

Bonds

Otherstatefunds

Generalstatefunds

Federalfunds

Where the money goes

United States, total fiscal-recovery-fund allocations

At February 7th , $bn

Source:NationalConference of State Legislatures

*Includesunemployment relief

2

Other

Education

Housing

Health and human

services

State operation and

administration

Infrastructure

Economic relief and

development*

100 20 30

KathyHochul

The unexpected

governor

“I

’m a buffalo billsfan. I always have

an underdog mentality,” said Kathy

Hochul, New York’s governor, earlier this

month. Last summer she succeeded An-

drew Cuomo, who had resigned amid sexu-

al-harassment and abuse allegations. Few

then would have predicted she would be

the front-runner in November’s governor’s

race and scoring umpteen political touch-

downs. The recent state Democratic con-

vention, where she was introduced by Hil-

lary Clinton, resembled a coronation. Sup-

porters carried tote bags depicting Ms Ho-

chul as Rosie the Riveter. Ms Hochul is an

underdog no longer.

She has surprised even longtime ob-

servers of Albany, New York’s capital. “Po-

litically, she’s off to a roaring start,” says

John Kaehny of Reinvent Albany, a govern-

ment watchdog. Despite being Mr Cuomo’s

deputy, she has successfully distanced her-

self from him and his alleged misdeeds.

She is more cordial with lawmakers (Ron

Kim, a Democratic assemblyman, has said

Mr Cuomo threatened to “destroy” him

after he criticised the governor). Instead of

vetoing bills, she requests tweaks to get the

legislation she wants. “She may not agree

with what you want to do, but at least

there’s a conversation,” says Sandy Galef, a

Democratic assemblywoman.

Ms Hochul has promised to forge a

“new era of transparency” in Albany, where

ethics scandals are the norm. She is prov-

ing to be far more politically effective than

anyone imagined.

NEW YORK

New York’s governor is proving to be

remarkably adept at the power game

New wave in New York