Senate Majority Leader Mitch McConnell pushed back on Democratic calls to provide aid to states in the upcoming coronavirus relief bill amid reports that President Donald Trump plans to use the funds to pressure states into reopening.
Congressional leaders and the White House are negotiating a bill that would provide more than $300 billion in additional funding for the coronavirus small business relief fund, which ran out of money last week as big corporations used the program's "confusing" guidelines to score tens of millions for themselves.
Treasury Secretary Steven Mnuchin told CNN on Sunday that the deal is also expected to include $50 billion for another small business program, $75 billion for hospitals and $25 billion for testing.
The deal has been delayed after Democrats also pushed to include $150 billion in funding for states and local governments quickly running out of money as expenses rise while tax revenue plummets. But McConnell told Senate Republicans during a conference call with Trump and Mnuchin that the aid "would not be in the package," Axios reported.
"The thinking among some Trump administration officials is that many states should be reopening their governments soon and that additional funding could deter them from doing so," according to the report. Politico similarly reported that the White House has been "holding out because, in part, they believe if Congress keeps cutting checks for state and local governments, they will be disincentivized to open up their economies."
The delay comes as Trump backs astroturf-style protests, many of them organized or promoted by deep-pocketed groups backing the president, urging states to reopen — against his own administration's guidelines.
Governors, including Republicans, have been desperately pleading for federal aid as they seek to avert disastrous cuts to education and health care to make up for the dramatic revenue shortfalls.
"It's important for the feds to support our efforts to fund the stuff we do," Massachusetts Gov. Charlie Baker, a Republican, told CBS News on Sunday. "If we're laying off tens of thousands of people at exactly the time when they want to reopen the economy, we're going to be swimming against the current they're trying to create."
Maryland Gov. Larry Hogan, the Republican chairman of the National Governors Association, called for $500 billion in aid to states in a joint statement with Democratic New York Gov. Andrew Cuomo.
"In the absence of unrestricted fiscal support of at least $500 billion from the federal government, states will have to confront the prospect of significant reductions to critically important services all across this country, hampering public health, the economic recovery and — in turn — our collective effort to get people back to work," the governors warned.
These are not hypothetical future budget cuts. Los Angeles Mayor Eric Garcetti announced on Sunday that the city will have to furlough workers. More than 100 cities in Texas have pleaded for funding to avert similar moves. Missouri lawmakers are expected to approve steep cuts when they return later this month. Ohio cities are facing calamitous budget shortfalls.
"Nearly every American city is seeing a precipitous drop in revenue," the United States Conference of Mayors warned on Saturday. "Without federal support, many will be forced to lay off employees and make cuts that will hurt public safety."
Rather than give governors, a majority of whom are Republican, the funding they need to avert disaster, the Trump administration and Senate Republicans "have decided on a strategy of extortion," wrote Washington Post columnist Paul Waldman. "It'll lead to more infections, more deaths, and a longer recession? Too bad. It's what Trump wants, and that's all that matters."
Don't expect Trump to accept blame for any consequences though. The Wall Street Journal reported that the president has "asked White House aides for economic response plans that would allow him to take credit for successes while offering enough flexibility to assign fault for any failures to others."
As states face dire financial straits with no end in sight, governors may be forced to acquiesce to Trump's demands just to keep the lights on, only to face blowback if things go south.
"Faced with the desperation of a disintegrating revenue base and spiraling needs for social spending, governors may be forced to risk the health of their citizens and try to gamble that they can restart the economy," warned New York Magazine columnist Jonathan Chait. "The certainty of an unsolvable fiscal crisis, requiring massive cuts to education and health care, may outweigh the risk of a new outbreak. If the economy blossoms, Trump gets the credit. If the recovery sputters because people remain afraid to leave their homes, or if they do leave their homes and thousands of them die, then the governors who made the decisions get the blame."