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Last updated Nov 29, 2025
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Chamath @ 01:00:54Wrong
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U.S. state and local government rainy-day funds will be exhausted due to the COVID-19 crisis, and the federal government will subsequently bail out states and municipalities financially (e.g., via dedicated aid packages) within the following phases of the pandemic response (2020–2021).
Well, there, there were there were some provisions to do that, these rainy day funds. But those are going to get exhausted. And. Uh, you know, we're going to have to bail those guys out as well.View on YouTube
Explanation

The prediction has two main parts: (1) U.S. state and local rainy‑day funds would be exhausted by the COVID shock, and then (2) the federal government would bail out states and municipalities with large aid packages in 2020–2021.

1. Were rainy‑day funds exhausted?

Evidence from Pew and NASBO shows that while many states tapped their rainy‑day funds in FY2020, they were not exhausted in aggregate:

  • Pew reports that in FY2020, 15 states drew on rainy‑day funds, but nationwide balances only fell from about $78.7B to $71.6B, still near a record high. (pew.org)
  • Only a very small number of states (notably Nevada and New Jersey) actually drained their rainy‑day funds to zero; most others retained substantial reserves. (pew.org)
  • NASBO later notes that fears of widespread depletion “did not come to pass”: by FY2021, state rainy‑day balances had increased 58% over FY2020 to a new record ($121.8B), and continued to new highs in subsequent years. (community.nasbo.org)

So while some states used their funds heavily, state and local rainy‑day funds were not broadly exhausted during 2020–2021; in fact, on average they rebounded to record levels quite quickly.

2. Did the federal government bail out states and localities?

This part of the prediction is accurate:

  • The CARES Act (March 27, 2020) created the Coronavirus Relief Fund with $150B in direct assistance to state, local, tribal, and territorial governments. (congress.gov)
  • The American Rescue Plan Act (March 11, 2021) then provided roughly $350B in State and Local Fiscal Recovery Funds to help cover revenue shortfalls and pandemic-related costs. (home.treasury.gov)

These are precisely the kind of large federal aid packages (“bailouts”) he anticipated.

Overall assessment

Because the prediction, as normalized, hinges on rainy‑day funds being exhausted first and then a bailout, and the empirical record shows broad non‑exhaustion of those funds even as large federal aid arrived, the core conditional claim is not borne out. The federal bailout occurred, but the prerequisite exhaustion of rainy‑day funds did not, so the overall prediction is best classified as wrong.