WASHINGTON — Democratic governors last Thursday begged Congress to come to the aid of ailing states, which face unexpected expenses as they attempt to curb the spread of COVID-19 as well as massive revenue shortfalls due to the pandemic.
But Republicans at a House hearing rejected their pleas, arguing that states have yet to spend money provided by Congress earlier this year, and prospects appeared to dim for any kind of deal on additional emergency aid before the election. On the other side of the Capitol, the Senate failed to advance a “skinny” GOP relief bill that lacked direct funds for state aid and was opposed by Democrats as insufficient at $300 billion in new spending.
Two Midwestern governors said at the hearing that their residents can no longer struggle along without federal aid. “Our federal partners must step in and help,” said Kansas Gov. Laura Kelly. The Sunflower State needs “significantly more support” from the federal government to stave off drastic cuts and battle COVID-19 infections, support schools and the economy and respond to the pandemic, she said.
Minnesota Gov. Tim Walz echoed the point. “We appreciate everything you’ve done, but we’re not through this,” he said. “It’s not over.”
Kelly and Walz spoke during a hearing held by the U.S. House Financial Services Committee on states financial’ needs during the crisis.
‘Parading’ governors before Congress
Democratic Govs. Michelle Lujan Grisham of New Mexico and Lourdes Leon Guerrero of Guam also testified — but their collective pleas for cash fell on deaf ears in the GOP.
Rep. Patrick McHenry of North Carolina, the committee’s ranking Republican, accused Democrats of “parading” Democratic governors before Congress to ask for money, which he called a waste of time.
Rep. Tom Emmer, a Minnesota Republican, said Democrats used governors as “pawns” to justify billions in new spending.
Nationwide, governors are asking for $500 billion in federal support to weather the pandemic, an amount they say is needed to help states and territories pay for medical equipment and supplies and keep firefighters, police officers, health workers, teachers and other essential workers on the payroll during twin public health and economic crises.
Without the aid, 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,” Govs. Larry Hogan (R-Md.) and Andrew Cuomo (D-N.Y.), chair and vice chair of the National Governors Association, said in a joint statement this spring.
Unlike the federal government, most states cannot “deficit spend” to cover expenses.
In March, Congress passed a $2.2 trillion relief package that set aside $150 billion to help cities respond to the pandemic, but it only applies to those with more than 500,000 people and doesn’t allow officials to use the funds to plug budget shortfalls.
Senate GOP relief bill blocked
On Thursday, Democratic senators blocked a GOP coronavirus relief package from moving forward. The proposal doesn’t include any money for state and local governments or other Democratic priorities, such as rental relief and nutritional assistance.
It does include enhanced unemployment benefits, another round of federal small business loans, and billions of dollars in education and health funding, as well as legal protections as organizations reopen amid the pandemic.
It costs significantly less than an earlier GOP proposal, which didn’t have any aid for cities and states either.
But it fell eight votes short of reaching the threshold it needed to advance. All but one of the chamber’s 53 Republicans voted to end debate on the measure, while all 47 senators who caucus with the Democratic Party voted against bringing the bill to a full vote.
Kentucky Republican Rand Paul was the lone senator who defected from his party.
Democratic leaders roundly rejected the package, saying it doesn’t come close to meeting the country’s needs and is designed to give the GOP political cover as Republicans head into the fall elections.
On Thursday, Senate Minority Leader Chuck Schumer (D-N.Y.) called the package “beyond insufficient” and “completely inadequate,” and noted that “it does not provide a dime to help protect essential state and local services.”
Democrats have introduced their own $3 trillion package, which passed the U.S. House in May and includes nearly $1 trillion in aid to city, state, local and tribal governments. The package met stiff resistance in the GOP-controlled Senate. Democrats offered to lower their plan by roughly $2 trillion, but Republicans in Congress and the Trump administration didn’t bite.
Senate Majority Leader Mitch McConnell (R-Ky.) said the GOP bill breaks off “some of the most urgent, most bipartisan policies” but that Democrats blocked it for political reasons.
“Speaker Pelosi and the Democratic leader can keep up the frantic political spin,” he said on the Senate floor Thursday. “But none of that is what we vote on. We vote on policy.”
Time for a deal running out?
The chances for a compromise are narrowing as the elections approach — and aid to cities and states seems to have moved off of the negotiating table.
Treasury Secretary Steven Mnuchin said Wednesday he didn’t know if political leaders could reach a deal on another package, telling reporters, “We’ll see.”
Republicans have characterized such aid as a “blue state bailout” and denied the need for additional money — a point McHenry made again Thursday. He pointed to a recent report by the Congressional Research Service that found that roughly 25% of the $150 billion approved in March had been spent as of June 30.
“Democrats are using this hearing to claim that states are struggling,” he said, “but it certainly isn’t due to a lack of funding.”
“The best way to support states is by supporting local businesses, which support local economies and grow the tax base, he said. Democrats, he added, are preventing businesses from accessing additional support.
Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank, said at the hearing Congress has already responded to states’ needs in a “substantial way” and called for targeted support for schools and people experiencing prolonged periods of unemployment.
There’s “no excuse” for wasteful spending, he said.