The legislative response to COVID-19 has been an essential part of supporting Americans and the economy through the crisis. However, states are now navigating how to avoid a budget shortfall (sometimes referred to as a “fiscal cliff”) once federal aid wanes.
Since the coronavirus (COVID-19) pandemic began, the U.S. Federal Reserve has significantly ramped up its holdings of Treasury securities as part of a broader effort to counteract the economic impact of the public health emergency.
Unlike the federal government, which currently records $30 trillion in debt, most state governments have balanced budget requirements (BBRs) for their operating budgets which only permit borrowing for certain capital projects.
The depletion dates for Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund and Medicare’s Hospital Insurance (HI) Trust Fund have been relatively well known for the past 20 years and are now rapidly approaching.