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South Dakota Returns Unspent Pandemic Housing Assistance, Reduces Deficit Spending and Inflation; Dusty Disappointed?

South Dakota needs more affordable housing, but it’s spent less than a tenth of the federal and state money set aside to help low-income South Dakotans afford their rent during the pandemic:

As of early January 2022, the state had received about $271 million in federal funding to pay rent and utilities of low-income residents who fell behind during the pandemic. But so far, the state has distributed only about $24.9 million to needy residents, or about 9.2% of the total available funding.

In September, South Dakota and other states that did not spend the money fast enough were required to return some of the money to the federal Treasury. That month, South Dakota returned about $22 million in unused housing assistance funds to the federal government, which is reallocating the excess money to states that are using it faster [Bart Pfankuch, “South Dakota Returns Millions in Unused Housing Assistance Funds to Federal Government,” South Dakota News Watch, 2022.01.12].

Now you’d think our Republican delegation to Washington, with its feigned fear of deficit spending, would cheer this frugal resistance to inflationary stimulus. But Congressman Dusty Johnson trips on his fiscal laces:

“The Biden Administration flooded states with cash and they can’t spend this money fast enough,” Johnson wrote. “I’d like flexibility for states to spend unused dollars on things like roads and bridges before [C]ongress considers even more inflationary deficit spending” [Pfankuch, 2022.01.12].

Dusty, I know you Republicans contradict yourselves on the dangers of deficit spending from year to year, depending on whether Democrats are in charge, but you can’t contradict yourself from sentence to sentence in the same minute, where we all can plainly see the contradiction. If deficit spending causes inflation (and there may be alternative causes, like supply chain tie-ups, surges in demand, and shortage of workers), it doesn’t matter where we spend that deficit cash. Rent support, utilities checks, roads and bridges, affordable housingsewers, water projects, child care—the cash all pours into the same economy, stimulating purchasing and jobs, and cranking on the inflation lever you just said you want to stop cranking on. It’s as if Dusty is at McDonald’s ordering a Big Mac, the cashier asks if he wants fries with that, and Dusty says, No, thanks, I gotta watch my weight, so make that two Big Macs.

[Disclaimer: Dusty and I have the same metabolism; it may be years before Dusty has to say no to Big Macs.]

Deficit spending is deficit spending, and inflation is inflation. If they are bad, then they are bad whether Democrats or Republicans are in charge of spending those deficit dollars and creating that inflation. If deficit spending creates inflation, and if we send back a bunch of deficit spending we don’t need for affordable housing, then Republicans ought to be happy that we are dodging a little more inflation, not advocating that we redirect that deficit spending to other spending that would bring back that inflation.

Do you see how hard it is to figure out fiscal policy and economics when you try listening to Republicans? Make life simpler: elect Democrats!

9 Comments

  1. Sam@2 2022-01-13

    Democrats can not be to worried about affordable housing Joe Biden outlet the tariff on imported lumber fro Canada. This come at a time when lumber costs are at record lumber prices.

  2. M 2022-01-13

    Love the Big Mac analogy.
    This is all just pure stupidity. And then the Republicans complain about states that do spend the money on their residents by sending checks to help the needy. How do the landlords in the state feel about not receiving money for unpaid rent, higher utility bills, and overloaded services because more people are stuffed into an apartment? Because so many people are hurting here financially and lack of housing, landlords have raised rents but have gotten stiffed as well.
    Whether on housing or not, there are not enough affordable places to live even in this small town. We range from a bed bug ridden apartment complex to $1200 a month 2-bedroom duplex. A town of 3200 where the property taxes are high and older people are leaving at increasing rates. No independent living centers, nursing home….so Aberdeen we go.
    Pure stupidity to turn down more housing monies, assistance to those who really need it, and some landlords who have taken some hits financially.

  3. larry kurtz 2022-01-13

    Watching the GOP eating itself from the inside out means 2022 is already getting better. Doesn’t this report contradict Mrs. Noem by saying families in the state lost so much financial ground they even failed to qualify for federal housing supports? According to U-Haul New Mexico eclipsed South Dakota as an inbound state in 2021.

  4. bearcreekbat 2022-01-13

    Amazing how history repeats itself. In 1980 the Janklow Administration planned to return unspent federal funds earmarked to help low income South Dakotans pay winter heating costs. The problem then was the Janklow Administration’s failure to adequately inform potential recipients of the availability of this assistance, hence low income families failed to apply for the funds. Somehow Julie Grueshaw learned about this money and applied after the deadline and was denied assistance even though she met the criteria to qualify. In those days civil legal aid programs still could assist the poor with problems with government agencies, and Black Hills Legal Services took Grueshaw’s case and filed a class action against Janklow. Long story short, the US District Court held that the State’s inadequate notice to potential recipients had violated the Due Process clause, issued an injuction stopping the return of the funds to the feds, and ordered the State to properly notify recipients and give them sufficient time to apply. Surprise, surprise, all of funds quickly were spent exactly where earmarked – helping low income South Dakotans with their winter heating costs. The Eighth Circuit Court of Appeals affirmed the district court in a relatively terse opinion. Grueschow v. Harris, 633 F.2d 1264 (8th Cir. 1980).

    https://casetext.com/case/grueschow-v-harris

    Today, however, low income folks are handicapped by the federal restrictions (enacted by a Republican controlled Congress during the Clinton Administration) that prohibit federally funded civil legal programs services, such as Dakota Plains Legal Services, from assisting low income families needing legal help to resist unlawful government agency action. In any event, the refusal of local Republicans to use available federal tax dollars to help the needy in South Dakota is like a recurring virus that just won’t die. (See also, the refusal to expand Medicaid).

  5. Richard Schriever 2022-01-13

    Well, no professor, or grad student assistant is grading any economic analysis offered by any Republicans, so they can say and think whatever they want with or without being self-contradictory and suffer zero consequences.

  6. Porter Lansing 2022-01-13

    Before Washington accepts SD’s return there needs to be an investigation into what methods were employed to notify low-income SD citizens of their opportunity to get federal help.
    If and when SD’s notification methods are deemed insufficient, Washington should do the advertising necessary to notify people that qualify.
    We liberal states are paying for this aid and we want it to absolutely get distributed to people that need it.
    If SD doesn’t want to publicize that there really are plenty of needy folks in SD, Washington can do it without your state’s help.
    When South Dakota poor people are discriminated against, all Americans are discriminated against.

  7. Porter Lansing 2022-01-13

    PS … not distributing federal aid to people in need is a prime example of why “states’ rights” doesn’t work to equalize American opportunities.

  8. Arlo Blundt 2022-01-13

    Well…South Dakota has never done much to support low to moderate income rental housing or young workers home ownership both of which have economic impacts and ripple effects in communities. It is beyond the horizon for our legislature or state government. The federal programs have been stuck in the ditch since the George W. Bush administration. South Dakota is one big trailer park.

  9. O 2022-01-14

    Now it becomes clear that not helping those in need is not a tough-choices-with-limited-funds the GOP choose not make; helping the poor — even when fully funded — is not something of interest to them at all. This “let them eat cake” moment is needs far more light shed on our no-governance-all-campaigh leaders.

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