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Republicans take aim at Dems' relief package over tax-cuts provision

Republicans didn't put up much of a fight when the American Rescue Plan worked its way through the legislative process, but that was merely Round One.
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Then Federal Reserve Board Chair Janet Yellen arrives for a briefing at the U.S. Federal Reserve in 2017.Brendan Smialowski / AFP via Getty Images file

One of the biggest parts of the Democrats' COVID relief package is aid to states, cities, and tribes, which is intended to offset lost revenue from the pandemic. In fact, the American Rescue Plan is expected to send $350 billion to local governments, filling in budget gaps with federal resources.

How officials spend the money is largely up to them. Use the money to bolster public-health infrastructure? Great. Prevent layoffs for police officers and librarians? Go right ahead. Invest in public schools? No problem.

There is, however, one exception: Democrats added language in the new law that said states can't use the money to finance another round of tax cuts. And that, as NBC News reported yesterday, has suddenly become the basis for a new Republican lawsuit.

Ohio's attorney general is seeking to block a piece of the recently passed $1.9 trillion coronavirus relief package, arguing that it unlawfully restricts the state's ability to reduce taxes. In a court filing Wednesday seeking a preliminary injunction, Attorney General Dave Yost, a Republican, said the provision of the American Rescue Plan, which involves $350 billion tabbed for state and local governments in need of financial aid, is unconstitutional.

This didn't exactly come out of nowhere. The day before Ohio's Yost filed his case, 21 Republican state attorneys general threatened to sue the Biden administration over the tax-cut provision. From a Washington Post report:

The attorneys general from Arizona, Georgia, West Virginia and 18 other states called on the Biden administration to make it clear that they can proceed with some of their plans to cut taxes, including those that predate the stimulus, in a seven-page missive sent to Treasury Secretary Janet Yellen on Tuesday. Otherwise, they said, the relief law "would represent the greatest invasion of state sovereignty by Congress in the history of our Republic" — and they threatened to take "appropriate additional action" in response.

Evidently, Ohio's Republican AG wasn't willing to wait to see how this played out.

As far as the Biden White House is concerned, the COVID relief law "does not say that states cannot cut taxes at all"; it "simply instructs them not to use that money to offset net revenues lost if the state chooses to cut taxes." For many state GOP officials, that's apparently not good enough.

It seemed inevitable that Republican state attorneys general would start targeting the president's priorities in court, and now we know just how long it took: 56 days after Biden's inauguration.

It's too soon to say with any confidence whether, or how, the dispute will be resolved. It's possible that GOP officials are looking at a Trumpified federal judiciary and feeling optimistic about their chances.

Either way, Republicans didn't put up much of a fight on Capitol Hill when the American Rescue Plan worked its way through the legislative process, but that was merely Round One.