House Speaker Nancy Pelosi (D-Calif.) said Thursday that Democrats are weighing about $1 trillion in state and local government needs for the next coronavirus spending bill, a much larger figure than previously discussed that would represent an enormous federal commitment to bailing out hammered state and local budgets.
Pelosi’s comments set up an intense clash with Senate Republicans as Congress begins to debate its next steps in responding to the pandemic. Senate Majority Leader Mitch McConnell (R-Ky.) has said repeatedly in recent days that he will not agree to additional spending for state and local governments unless Congress also passes liability protections for businesses and health-care workers — an idea Pelosi has rejected.
President Trump, meanwhile, has suggested he will not approve more funding for states and cities unless they change their immigration policies to eliminate protections for unauthorized immigrants.
Pelosi said at a news conference Thursday that states have $500 billion in needs, a figure cited by the National Governors Association, while municipalities and local governments have sought a similar amount. She said the money could be made available to spend over several years.
“I talked about almost $1 trillion right there,” Pelosi said, while adding that “we do have other issues that we want to deal with” in the next spending bill.
The $2 trillion Cares Act that Congress passed in late March included $150 billion for states, but the money was restricted to use for coronavirus response, which some governors and mayors have complained has made it difficult for them to tap to help their budgetary needs.
Meeting with Trump in the Oval Office on Thursday, New Jersey Gov. Phil Murphy, a Democrat, said his state could take a $20 billion to $30 billion hit from the coronavirus, funds it would need from the federal government.
“This is to allow us to keep firefighters, teachers, police, [emergency medical services] on the payroll, serving the communities in their hour of need,” Murphy said. “And that’s something that we feel strongly about. We don’t see it as a bailout. We see this as a partnership.”
Trump replied, “I will say that’s a tough question, because you’re talking about the states, and whether you call it a bailout or a lot of money, and a lot of it’s for years, long before you were there.”
Republicans and Trump say they don’t want to bail out states that they allege have been mismanaged in the past. Democrats insist that the extreme budgetary problems hitting state and local governments are largely a result of the coronavirus pandemic and the loss of tax revenue, as well as payments for unemployment claims and other needs. Many state governments and local leaders have said they have begun mass layoffs, including of public safety workers, as a result of the virus.
“This is strictly about the coronavirus. It is about what your outlays are for the virus and what your revenue loss is on that,” Pelosi said.
“We’re not going to be able to cover all of it, but to the extent that we can keep the states and localities sustainable, that’s our goal,” she said.
Republicans immediately rejected the notion of devoting such a large amount of money to state and local budgets.
“That strikes me as a pretty outrageous number, just for state and local support. We’ve already provided $150 billion,” Sen. John Cornyn (R-Tex.) told reporters Thursday after presiding over a brief “pro forma” session of the Senate. But he said he would favor allowing states and local governments to have more flexibility in how they can spend the money, an issue he said he’s been hearing about from constituents.
“If you generate your revenue in a city or county or state by sales tax, and there are no sales because everybody shut down, I think that’s related to the coronavirus and I would favor giving them flexibility,” Cornyn said.
In an earlier interview on Fox News Channel, McConnell said that Republicans were not interested in borrowing from future generations to bail out states for “bad decisions they’ve made in the past unrelated to the coronavirus,”
“We don’t need an epidemic of lawsuits in the wake of the pandemic," McConnell added. "And so if we do another rescue package, and we may, we need to take our time, do it right, and it needs to include these liability protections so that all of these brave workers and brave businesses that will be reopening are not subjected to this second epidemic of litigation.”
At a news conference earlier this week, Pelosi told reporters, “We would not be inclined to be supporting any immunity from liability.”
House Democrats are also considering a wide variety of other provisions as they assemble the next coronavirus package, including additional direct payments to individuals, more money for food stamps and health care providers, housing assistance and potentially money for the Postal Service and voting by mail. Pelosi and House Majority Whip James Clyburn (D-S.C.) also discussed Thursday the need to include an investment in broadband.
Congress has already passed four bipartisan bills to address the coronavirus, totaling nearly $3 trillion, an unprecedented sum. There were some bitter partisan clashes along the way, but lawmakers on both sides believe crafting the next relief package will be even harder, as Republicans begin to focus on encouraging the economy to reopen as Democrats remain intent on pumping additional federal funding into the economy. It’s also unclear where a compromise might be found on the question of including liability protections for businesses as McConnell is demanding.
Pelosi suggested the House would be returning to the Capitol the week of May 11. House leaders backtracked on plans to reconvene next week, citing medical concerns, although the Senate will be coming back into session next week.
