Senate Republicans unsuccessfully attempt to reverse Treasury’s misuse of COVID-19 relief funds

Senate Republicans failed to overturn new regulations from the Biden administration that give states greater flexibility in using COVID-19 relief funds.

Last fall, the Treasury Department issued new rules allowing states to “obligate” legal and administrative expenses associated with the funds past an end-of-year deadline. Sen. Eric Schmitt (R-MO) sponsored a disapproval resolution to reverse that rule change, arguing the Biden administration was violating the expiration dates laid out in the American Rescue Plan.

But the Senate rejected his attempt to roll back the regulation in a party-line vote on Wednesday. Forty-six Republicans voted in favor, with 49 Democrats and independents opposed.

The American Rescue Plan, signed into law in 2021, allocated $350 billion for states and localities dealing with the effects of the coronavirus pandemic. The fund was geared toward preserving government services but also the construction of broadband and other infrastructure.

What’s left three years later can continue to be obligated through the end of 2024. It must then be spent by 2026.

But Schmitt and other Republicans have taken issue with an exception to the 2024 deadline for qualified costs, namely compliance, record-keeping, and audit expenses that localities are allowed to estimate and then submit in the coming months.

In total, Schmitt calculates the rule change will cost the government $13 billion. “That’s a lot of money; that’s $1,200 for every American family,” he told reporters on Wednesday.

The resolution, which Democrats could not prevent from receiving a vote under the Congressional Review Act, feeds into common claims of waste and abuse by Republicans who want to claw back the COVID-19 relief funds.

The Treasury Department did not respond to a request for comment, but Sen. Ron Wyden (D-OR) argued from the Senate floor that the resolution could negatively affect thousands of projects nationwide.

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The White House issued a veto threat of the resolution Wednesday ahead of the vote, arguing repeal of the rule would “disrupt critical infrastructure and housing projects, risk layoffs of public safety workers, and create significant oversight gaps that could put taxpayer dollars at risk.”

The resolution was just the latest CRA. Republicans have targeted everything from environmental to housing regulations crafted by the Biden administration under the law’s authority.