Fiscal Stimulus or Debt Relief: The Effect of Federal Pandemic Aid on State and Local Pensions
By Grace Brang, Sewin Chan & Travis St. Clair Between 2020-2021, the U.S. federal government passed four major pieces of legislation that included nearly $1 trillion in aid to state and local governments. One concern with distributing federal stimulus in the form of intergovernmental transfers is that subnational governments may use the aid to pay down unfunded pension liabilities or other debt rather than preserve employment. We examine the effect of fiscal stimulus passed in response to Covid-19 on public...