America's Next Crisis Is Already Here
The coronavirus pandemic has eviscerated state and local finances. The countrys roughly 90,000 nonfederal-government entities provide and pay for most of the government services that Americans receive. Factor out federal defense spending and the federal governments contributions to health care, and state and local governments do most of the government spending too: $4 trillion worth, or more than one-fifth of Americas gross domestic product.
State and local governments lay the groundwork for prosperity, often literallybuilding roads and airports, courts and schools. Those they employ or contractincluding police officers, firefighters, teachers, health-care workers, garbage collectors, and building inspectorsmake the rest of the economy hum.
But the dollars that state and local governments rely on to support public services are withering. Closed shops and offices, empty streets, and the obliteration of the travel and entertainment industries threaten nearly every source of state and local revenue. Talk to state and local officials, and those who serve and study them, and youll soon discover that theyre preparing for a grim triage of services.
The stakes couldnt be higher. The loss of essential services hurts a communitys health, safety, and quality of life. It is also politically dangerous. When governments fail to protect their constituents during a pandemic and cut back on social services in its aftermath, they can sour their constituents on democracy and help fuel political extremism.
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