Oklahoma Policy Makers should beware the Biden spending binge: Analysis
Published: June 18th, 2021
The Biden Administration’s spending binge has officially begun.
Late last month, most states, counties, and major cities across the country received 50 percent of their allotment from the bloated $1.9 trillion American Rescue Plan (ARP). (https://home.treasury.gov/news/featured-stories/fact-sheet-the-american-rescue-plan-will-deliver-immediate-economic-relief-to-families#main-content )
Although the plan is completely partisan and failed to receive a single Republican vote in Congress, the Biden Administration has moved forward with allocating an unnecessary $2.1 billion for the State of Oklahoma.
In addition, Oklahoma County is slated for $154 million and Tulsa County is set to receive $126 million. The City of Oklahoma City is slated to get $125 million and the City of Tulsa $88 million.
This new cash for massive government spending comes as the American economy is roaring back to life, corporate profits are crushing expectations, and state and local governments have budget surpluses. Thanks to the bipartisan COVID-19 packages passed in 2020, the state received $1.2 billion.
In addition, Oklahoma County was allocated $47 million and Tulsa County received $113 million. Moreover, the City of Oklahoma City received $114 million and the City of Tulsa received $30 million.
This was more than enough money to help Oklahoma effectively respond to the COVID-19 pandemic and keep our economy afloat.
Yet, already one can hear politicians saying, “We have to maximize this new round of funding.” If I gave my college kids each $25,000 this summer, could they spend it? Sure, but they don’t need it. Similarly, Oklahoma can spend these funds, but we need judicious oversight to minimize the risk of getting addicted to the flow of one-time cash coming in the door.
The newly released guidelines for ARP funds also make spending very easy and create extremely wide latitude for outlandish investments, such as building a “more equitable economy,” addressing “disparities and public health,” and funding “projects that address the impacts of climate change.”
With these broad guidelines, it is likely that the ARP will spawn a gargantuan amount of government boondoggles across the country that will waste billions of dollars on unnecessary projects and fail to advance prosperity for the American people. Fortunately, the Oklahoma Legislature has already put into law a requirement that federal dollars sent to the State cannot be spent on recurring expenses. Unfortunately, $1.3 billion will bypass the State and will go directly to all 77 counties and to nine cities in Oklahoma with very few guardrails or methods for monitoring spending.
This massive amount of money comes on the heels of last year’s $5.6 trillion of relief and will very likely overheat the American economy.
Already the year-over-year cost of consumer goods has gone up by 7 percent. The Producer Price Index has gone up 4.2 percent. The prices of commodities, housing, and energy are surging. With inflation running hot and interest rates on the rise, what will the state of the economy be when the federal money runs out?
The Oklahoma economy and government revenues have surged in the wake of the $28 billion stimulus that poured into the state in 2020. Now another $8 billion is coming.
Oklahoma leaders should intentionally focus on one-time investments that will be transformative in nature and help us increase our average household income, which is still 20 percent below the national average.
We need investments that will result in high-paying jobs. We need investments that will better educate and prepare our students for the 21st century workforce.
We must avoid investments that create gaping budget holes. We must avoid investments that do not have true measurable returns for success.
If we “maximize funding,” we become complicit with the Biden spending binge. We become complicit in borrowing far too much money from our children’s future. We become complicit in sowing the seeds of financial destruction for our economy. Oklahoma leaders need to find the courage and fortitude to take only what we need and send a large portion of ARP funds back to Mr. Biden.
A note from Pat McGuigan: Mike Mazzei served in the Oklahoma Senate from 2004 to 2016 and was chairman of the Senate Finance Committee for 10 years. During that time, he worked with Randy McDaniel (a former state representative and presently state treasurer) in achieving pension reforms that CapitolBeatOK.com rated as among the most important fiscal reforms in modern Oklahoma history. Mazzei also served as the Oklahoma Secretary of Budget from 2018 to 2020. A certified financial planner, Mazzei is the president of Tulsa Wealth Advisors.