Policy

Can the Fed Help Ease State and Local Fiscal Distress?

Governing: With the Senate recessed until after Labor Day, it's a safe bet that state and local governments will have to wait a while to learn whether they will stand any chance this year of getting fiscal aid from Uncle Sam to offset their pandemic-recession revenue shortfalls. It's also a safe bet that anything that does clear Capitol Hill this year will amount to a only a fraction of the $915 billion of intergovernmental fiscal aid contained in the HEROES Act passed by the House months ago. There is almost no hardball advantage for the GOP to provide fiscal relief that extends much beyond the November elections.

So if substantial, longer-term fiscal relief from Washington isn't forthcoming soon, should states and local governments look to the Federal Reserve as their banker of last resort? And if it comes to that, how would — and should — the process work?

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