The next big clash on Capitol Hill: state bailouts for COVID-19 deficits

By: - April 30, 2020 1:40 pm
McConnell Trump covid 19

U.S. Senate Majority Leader Sen. Mitch McConnell (R-Ky.) (3rd R) speaks to members of the media as (L-R) Sen. John Barrasso (R-Wyo.), Sen. John Thune (R-S.D.), President Donald Trump, Vice President Mike Pence, Sen. Roy Blunt (R-Mo.), Sen. Todd Young (R-Ind.) and Sen. Joni Ernst (R-Iowa) listen at the U.S. Capitol after the weekly Republican Senate policy luncheon January 9, 2019. Photo by Alex Wong | Getty Images

WASHINGTON — State and federal lawmakers alike want Congress to send more cash in the next round of COVID-19 legislation to aid ailing cities and states.

But some high-profile Republicans have bristled at the idea, signaling a coming clash over the issue on Capitol Hill.

The debate comes as state and local governments around the country face massive revenue losses that threaten funding for police, fire departments, emergency responders, schools, trash collectors, food banks, libraries, museums and civic spaces.

House Speaker Nancy Pelosi (D-Calif.) said Thursday she is considering legislation that would send as much as $1 trillion in federal funds to sustain state and local governments over the next several years.

Last week, a pair of bipartisan senators unveiled a $500 billion “stabilization fund” for states and municipalities with more than 50,000 people.

And House lawmakers introduced a proposal in early April that would send $250 billion in “stabilization funds” to cities and towns in addition to separate aid for states.

“We’re pushing very hard to help our heroes, our first responders, the folks out on the frontlines in our communities,” Rep. Andy Levin, a Michigan Democrat who introduced the House bill, said Thursday on a call with reporters.

A ‘blue-state bailout’

President Donald Trump questioned the effort this week and suggested his support may hinge on state and local support for his immigration policies, according to Politico.

“Why should the people and taxpayers of America be bailing out poorly run states … and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help,” he tweeted Monday.

Senate Majority Leader Mitch McConnell (R-Ky.) characterized calls for more federal aid for cities and states as a “blue-state bailout” and said last week he would be open to allowing states to file for bankruptcy.

Of course, McConnell and Trump’s comments don’t take into account that many Republican-run states have also asked for federal aid, including Arizona.

In March, Gov. Doug Ducey and 20 other Republican governors signed a letter to congressional leaders in both chambers, including McConnell, asking for Congress to approve block grants to the states.

McConnell changed course this week, saying he would be open to such aid in exchange for legal protections for businesses and workers, Politico reported.

Democratic leaders quickly panned the pitch — an indication that the bipartisanship that drove earlier COVID-19 aid packages through Congress is eroding further.

Some Republicans, meanwhile, are voicing strong opposition to the plan.

“There’s more Congress can do,” Sen. Rick Scott, a Florida Republican, wrote in the Wall Street Journal. “But one thing we absolutely shouldn’t do is shield states from the consequences of their own bad budgetary decisions over the past few decades.”

Other Republicans have expressed concern about deficit spending, noting that Congress has already spent some $3 trillion in response to the pandemic.

In March, Congress set aside $150 billion in its $2.2 trillion coronavirus package to help cities and states respond to the pandemic. But the legislation didn’t allow officials to use the funds to plug budget shortfalls, and only provided direct aid to municipalities with more than 500,000 people.

A spokesman for Ducey told Arizona Mirror this week that the governor is “always going to seek flexibility from the federal government” so the state can “address the public health crisis and preserve the social safety net for Arizonans.”

Ducey, cities want federal COVID aid. Will Trump, McConnell agree?

Democrats sought additional funding for cities and states in a $484 billion COVID-19 package approved last week, but Republicans balked.

The next bill “must include desperately needed funding for state, tribal, and local governments so they can continue to pay frontline public sector workers,” Rep. Debbie Dingell, a Michigan Democrat, said Thursday. “This is where the fight is happening. It’s at the grassroots level.”

Rep. Dean Phillips, a Minnesota Democrat, echoed the sentiment. “This is an unforeseen extraordinary circumstance and it’s in the best interest of every state and our nation to support states because defaults are unacceptable for reasons I do believe most understand.”

A spokeswoman for Republican U.S. Sen. Martha McSally did not return emails from the Mirror asking whether she supports aid to the states, and whether she agrees with McConnell and Trump’s comments on the issue. McSally’s office declined to comment last week to The Arizona Republic on McConnell’s statements.

Democratic U.S. Sen. Kyrsten Sinema issued a press statement April 23 criticizing McConnell’s comments on states issuing bankruptcy because of the COVID-19 pandemic, though she didn’t mention the Senate majority leader by name.

The Senate is slated to reconvene on Monday, while the U.S. House plans to return the week of May 11.

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Allison Stevens
Allison Stevens

Allison Stevens is a reporter for States Newsroom's Washington bureau and can be reached at [email protected]