Veterans, Carpenters and Vaccines: What’s at stake if US COVID aid shuts down

By Andy Sullivan

WASHINGTON (Reuters) – A Republican proposal to scrap unspent COVID-19 relief funds could undermine health care for military veterans and pensions for workers while doing little to improve the U.S. financial picture, a Reuters review of federal spending has found.

The spate of COVID relief funds — totaling $5.2 trillion — approved by Congress in 2020 and 2021 under Republican President Donald Trump and his Democratic successor Joe Biden has emerged as an early target for House Republicans when they are looking for ways to rein in federal spending.

House Republicans, who hold the majority in this chamber, have said they will not vote to raise the federal government’s $31.4 trillion debt limit without reaching an agreement to cut spending. Failure to raise the limit would result in a default that would shake the economy.

But unspent COVID relief is a small target, with less than $80 billion unspent through January, White House budget numbers show. Medical programs to fight the virus have drained most of their funding, and the enhanced safety-net programs that helped Americans weather the disruption have largely expired.

That total — 1.5% of the amount approved by Congress — will continue to decline in the coming months as federal agencies continue to spend. Federal spending on health care and food stamps is also likely to fall if Biden allows the state health emergency to expire in May.

“At this point, we’re so late in the game that we’re just not going to recover much,” said Marc Goldwein, policy director of the Center for Federal Budget Governance, a nonpartisan monitoring group.

Republicans say that’s no reason to ignore the remaining money while they put together a spending-cut proposal.

“Reclaiming unspent funds from the trillions Washington has flooded the economy with during the pandemic is an obvious starting point for any debt ceiling discussion,” said Tim Reitz, executive director of the House Freedom Caucus, one of several Republican groups that having said this the remaining aid should be withdrawn.

Democrats and Republicans have largely agreed not to cut Social Security and Medicare programs, which account for about a third of the $6.2 trillion national budget, leaving lawmakers looking for smaller targets for cuts.


Reclaiming unspent COVID funds would have real implications.

The bulk, $47 billion, is earmarked for cash-strapped union pension plans that have turned to the Federal Pension Benefit Guaranty Corporation for help. The agency prioritized the hardest-hit pension funds first and is now working with those that need less emergency relief, a White House official said.

If Congress were to reclaim that money, fishermen in Massachusetts and carpenters in Ohio would be among the roughly 1 million union workers who would not receive their full pension benefits.

A recovery could also affect veterans’ healthcare, as the Department of Veterans Affairs has yet to spend $4.6 billion of the money received on COVID-19-related treatment. The health system is currently treating 4,500 patients for the disease, according to an agency dashboard.

Another $6.8 billion remains to fight the virus itself by developing improved vaccines and tests and researching issues like Long COVID, the White House said.

Other remaining pots of money include $3.2 billion for small business support and $2.5 billion for bus and subway systems struggling with falling fare revenues. Much of that money is earmarked for specific recipients, according to the White House.


Some funds that remain on the books are never spent and therefore do not offer potential budget savings.

The Department of Transportation, for example, distributed less than $700 million from a $3 billion fund aimed at preserving aircraft manufacturing jobs after several large companies declined to participate.

Businesses were also asking for less than Congress expected tax breaks to keep employees on the payroll and allow for COVID-related sick leave, according to the US Government Accountability Office.


Some Republican-led states opted against extended unemployment and food stamps, saying they would discourage work. As a result, the federal government spent less than usual.

The Republican governors of Nebraska and Arkansas last year rejected a second round of relief for rent arrears. These dollars were then given to other states.

But both Republican- and Democrat-led states accepted $350 billion in 2021 and 2022. They have until the end of 2024 to decide how to spend it and until the end of 2026 to actually do so.

That money sits out of the reach of Congress in state and local government coffers. Republican Senator Rick Scott in January urged governors and mayors to voluntarily return that money to pay off the federal debt.

The Treasury Department said it hasn’t seen many state and local governments return funds, although it didn’t provide a specific dollar amount.

(Reporting by Andy Sullivan; Additional reporting by David Morgan; Editing by Scott Malone and Alistair Bell)

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