Federal Cash For Illinois Is Vastly More Than Commonly Reported: $138 Billion And Counting – Wirepoints

By: Mark Glennon*

We finally have a more comprehensive tally of the grotesquely oversized federal assistance dispensed under the guise of pandemic relief. It’s from CRFB, the Committee for a Responsible Federal Budget, and it’s broken down by states. It obliterates claims made by Illinois lawmakers that they’ve put this state on a sound fiscal path. Illinois, instead, was temporarily bailed out.

The total amount committed or disbursed to public and private sector recipients in Illinois is $138 billion and growing, the CRFB shows. Another $24 billion is allowed for Illinois under federal legislation already passed.

The current total of $138 billion may even shock many who have been following the federal bailout. That’s because most reporting to date has focused only on the direct aid to the state under the recent American Rescue Plan Act, which was only $8.1 billion. CRFB’s $138 billion total state aid includes distributed aid to both the public and private sector across Illinois:

• • Loan and Grant Programs: $63.5 billion
  • State & Local Funding: $16.2 billion
  • Income Support: $24.3 billion
  • Direct Payments: $10.0 billion
  • Health Spending: $7.86 billion
  • Other Spending: $4.01 billion
  • Administrative: $5.95 billion
  • Lending Facilities: $4.04 billion
  • Other Loan Purchase Programs: $1.59 billion

The full breakdown is available on their site by clicking through for details.

The portion that went to the private sector bolstered the state by keeping tax receipts far higher than predicted. The direct aid to local governments also benefited the state by taking the pressure off on areas where expenses are shared, such as school funding and allocation of the Local Government Distributive Fund. The state is floating on federal money.

CRFB’s numbers blow to smithereens claims made Gov. J.B. Pritzker and state lawmakers that the State of Illinois has gotten its financial house back in order. The state’s new budget is a “giant step forward to true fiscal stability,” Pritzker says. He claims Illinois achieved “a level of fiscal prudence not seen in our state for two decades…We are also paying off pandemic borrowing early, we’re meeting our full pension obligation, and we’re saving taxpayers tens of millions of taxpayer dollars along the way.” One Democrat in the General Assembly after another has claimed basically the same.

That’s hogwash. The direct aid alone, to most states, including Illinois, exceeded any fiscal harm caused by the pandemic. We made that case earlier, as have many others.

The CRFB reaffirmed that and went further, addressing the impact of the indirect aid. Earlier this month it reported:

New data from the Bureau of Economic Analysis (BEA) for the month of April shows that disposable personal income (DPI) was 12.0 percent above pre-pandemic levels, or 3.8 percent above pre-pandemic levels excluding COVID relief. We have documented in a number of analyses how the $5.9 trillion ($5.2 trillion net) of enacted COVID relief to date has propelled personal income to record levels. [Emphasis theirs.]

It’s true for Illinois, too, which is clear from BEA numbers. Personal income for the state’s most recently reported quarter ending in March is 17% over pre-pandemic highs. That’s thanks to the tsunami of federal cash, not fiscal genius in Springfield.

Importantly, much more has yet to be included in CRFB numbers, as explained in their methodology page. Still to be added are most funds that go to individuals that are not currently tagged by state – including Economic Impact Payments, unemployment insurance benefits, and various tax breaks. CRFB updates its report weekly so its totals will grow. In addition, another $4 trillion of federal aid legislation in further aid looms – being pushed by the Biden Administration and Congressional Democrats – which also isn’t in CRFB’s numbers!

CRFB is a credible, reputable, bipartisan source. Its board of directors includes Erskine Bowles, who served as director of the Small Business Administration under President Clinton; Mitch Daniels, former Republican governor of Indiana; Leon Panetta, who served in both the Clinton and Obama Administrations; and former Republican U.S. Senator Alan Simpson.

The only place I see where CRFB’s numbers might be overstated is their inclusion of $3.2 billion of loans from the Federal Reserve Bank under the Municipal Liquidity Facility, which is being paid back in next year’s budget. However, that’s tiny in relation to the whole. I suppose one might also recognize that much of the federal bailout has been lost to fraud. About $260 billion of PPP and other loans may be lost to fraud, according to a new report in Reason, and a full half of unemployment benefits probably went to fraudsters, according to a detailed Axios report.

Meanwhile, much of Illinois and the rest of the nation is crippled by a severe labor shortage. President Biden recently admitted, in essence, that the policy of paying people not to work is designed to force the private sector to increase wages to compete with that federal policy.

So, instead of wages being bid up as they should be – by a strong economy like we had before the pandemic – they are now to be bid up by gifts from Washington that taxpayers will have to repay through taxes or inflation.

Has any developed nation ever undertaken such madness? The insanity of American fiscal and monetary policy is matched only by the gall of Illinois politicians who are using it to claim they’ve put Illinois on the right track.

*Mark Glennon is founder of Wirepoints.

Read more about the federal bailout of Illinois here:

• The states’ 2020 financials are in: Biden’s billions in new federal aid aren’t needed – Wirepoints Special Report
• Mass Federalization: How Washington is Bailing Out Failed States, Decapitating Competitive Ones and Ending America As You Knew It
• Torrent Of Federal Cash Stifling Return To Work As Fed Repeats Historic Error – In Reverse 
• Illinois 2022 budget: The state’s financial cliff will be waiting after the federal largesse runs out