Reprint. Red states lead economic recovery, giving GOP ammo against Biden’s spending plans.

Red states lead economic recovery, giving GOP ammo against Biden’s spending plans.

States with Republican governors are leading the recovery from the Covid-19 economic shock, complicating President Joe Biden’s push for a new sweeping infusion of federal aid.

Of the 15 states that have returned to pre-pandemic levels of economic activity, 12 are led by Republican governors, Federal Reserve data shows. Of the 10 states reporting the lowest levels of activity since January 2020, seven — including New York, Pennsylvania and Illinois — are run by Democratic governors.

Red states are also reporting lower unemployment numbers.

Businesses, economists and policymakers are divided over whether conservative governors’ policies on jobless benefits and Covid-19 restrictions — many of them chose not to issue stay-at-home orders at all — are actually helping their economies or if their states’ industries simply didn’t fall as far behind during the pandemic.

Still, the uneven recovery and the lackluster job growth reported in both April and May have given Republicans ammunition to repudiate Biden’s expensive aid plans. They’ve also ignited concerns among conservatives that the federal assistance — especially the $1.9 trillion American Rescue Plan that passed without GOP support in March — should have focused more on who needed help the most.

“Across the board, there could have been a lot better use of the funds being more targeted,” Rachel Greszler, an economist at the Heritage Foundation, said. Congress should have linked unemployment insurance to workers’ earnings or allowed states to use federal aid to dole out their own benefits based on what the labor market required “in the ways that they thought would work best for them,” she said.

The seven states that chose to not issue a stay-at-home order last year — Arkansas, Iowa, Nebraska, North Dakota, South Dakota, Wyoming and Utah — were all led by GOP governors.

Republican-led states were also early to ease pandemic business restrictions and mask mandates: Missouri, Montana, Iowa and Alaska were some of the first states to peel back their business requirements in January and February. Texas, Arizona, Arkansas, New Hampshire and Wyoming followed in March.

Of those states, Montana, New Hampshire, Arkansas, South Dakota, Utah, Missouri and Nebraska returned to pre-pandemic levels of economic activity in April and reported lower unemployment than the national 5.8 percent rate in May.

By comparison, states that still have some coronavirus restrictions in place, including California, Connecticut and Hawaii, saw the highest rates of unemployment in the country in May and were still producing less in April than they did pre-pandemic.

Washington lawmakers sent direct checks to millions of middle- and lower-income Americans and supplemented state unemployment benefits with extra weekly payments and coverage for workers traditionally ineligible for jobless aid. They also doled out $1 trillion in forgivable government-backed loans to small businesses under the Paycheck Protection Program, initially on a first-come, first-served basis.

Other economists question whether Congress could have maneuvered as precisely as Greszler suggested to rescue the economy in the beginning, facing a flood of business closures and tens of millions of layoffs caused by the pandemic health restrictions.

“There isn’t a lot of nuance that you can use in policy when you’re trying to get money out the door as quickly as possible and adjust for the local situations for every worker in the state,” said Daniel Zhao, senior economist at Glassdoor. “It’s very difficult to get aid out to everybody who needs it at the same time, and in a way that was actually targeted through individual situations.”

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