Democrats asked for $750B in state stabilization funds in coronavirus stimulus

Bonnie Cash

Senate Democratic negotiators initially asked for $750 billion in state stabilization funds, which Republicans have rejected as a non-starter, according to a person familiar with the talks.

While the Democrats won’t get their wish for a three-quarter-trillion-dollar bailout fund for states, the Senate stimulus deal will still include “a big number” to help hard-hit states, such as Senate Minority Leader Charles Schumer’s (D-N.Y.) home state of New York.

Schumer made a plea on the Senate floor Saturday for Congress to cover huge looming shortfalls in state budgets.

“I want to emphasize that one of the issues that’s quickly emerging is that state and local governments are quickly running out of cash, and they soon will be broke,” he warned.

He said governors, mayors and county executives in both parties are “clamoring for help.” 

A spokesman for Schumer did not immediately respond to a request for comment.

As a result, the stimulus package could balloon to nearly $2 trillion, a number National Economic Council Director Larry Kudlow floated Saturday morning before later walking back his prediction.

“Democrats are getting some of the things they’ve asked for,” said Senate Majority Whip John Thune (R-S.D.). “On the main points, I think everybody is kind of in the same place, and I hope that will lead to high-level cooperation in putting this together.” 

Thune said he expects the final deal to include a large state stabilization fund.

“Both sides think it’s going to have to be a big number,” the GOP whip said. “I think it will be a big number.

“The stabilization fund, the advantage of that is that the Treasury can use that effectively to leverage multiples of what you’re actually putting into that fund to provide assistance to companies,” Thune added.

A Republican senator familiar with the negotiations confirmed that the final deal will include a huge amount of money to cover state expenses. 

“We’re going to have an adequate amount of money. The state stabilization fund is very important,” said the lawmaker, who called the Democratic request for states “a lot of money.”

“It’s going to be big,” the lawmaker added.

As a result, the entire stimulus package could swell to $2 trillion — not counting expanded authority for the Federal Reserve to use the Exchange Stabilization Fund to provide extra liquidity to markets.

The Democratic governors of New York, New Jersey, Connecticut and Pennsylvania on Friday wrote a letter to President Trump and congressional leaders asking for at least $100 billion in emergency funding for their region alone.

The governors warned that their transportation systems are seeing ridership “decimated,” costing their treasuries billions of dollars in lost revenue, their unemployment programs are flooded with new applicants, and their social services have been put under strain because of “thousands of unanticipated participants.” 

“For our region alone, we believe this assistance must total at least $100 billion – and likely more – in immediate relief to account for the devastating impact of COVID-19 on our four state budgets,” wrote New York Gov. Andrew Cuomo, New Jersey Gov. Phil Murphy, Connecticut Gov. Ned Lamont and Pennsylvania Gov. Tom Wolf.

A second person familiar with the Senate negotiations said the Democrats’ request for state emergency aid was “very high” and “well in excess” of $150 billion.

Tags Charles Schumer Coronavirus coronavirus stimulus Donald Trump John Thune Larry Kudlow
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