WASHINGTON -- White House officials have signaled privately that they are willing to provide tens of billions of dollars in relief to states as part of a bipartisan deal with Democrats in the coming weeks, according to seven people familiar with the internal deliberations who spoke on the condition of anonymity to discuss the matter.
Although some Republicans have warned that Democrats want "blue state bailouts," many White House officials now believe that providing new funding to states to deal with challenges related to the coronavirus will be necessary if they want to secure their own priorities, such as tax breaks and liability protections for businesses, the people said.
Senate Republicans are broadly opposed to the payroll-tax cut for workers that Trump has repeatedly pushed.
Two White House officials said they have made it clear to business leaders and conservative allies in recent days that Trump is "not willing to provide a blank check" to states but is "open" to negotiating whether he can win concessions from Democrats on taxes in exchange for an influx of cash -- and they have told conservative leaders that they will make sure any new cash is directed only toward problems sparked by the pandemic.
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An announcement of the White House's tax proposals is expected in the coming days.
The National Governors Association reiterated on Wednesday its call for $500 billion in aid to address state budget shortfalls and other things.
The discussions in the West Wing and among Republicans comes as lawmakers are intensifying their jockeying over the next congressional aid package, with House Speaker Nancy Pelosi, D-Calif., on Tuesday unveiling a more than $3 trillion package aimed at arresting the downturn.
Pelosi lashed out Thursday at Trump administration officials and congressional Republicans seeking to slow work on a fresh round of coronavirus relief. The White House responded minutes later with a threat that President Donald Trump would veto the $3 trillion economic package Democrats have proposed.
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At a Capitol news conference, Pelosi lambasted Republicans who've said they want to hold off for now on more relief spending. "It's amazing to me how much patience and how much tolerance someone can have for the pain of others," she said.
Pelosi told reporters she believed both parties "and even down Pennsylvania Avenue" -- a reference to the White House -- understand "the hardships Americans are feeling." She called the Democratic proposal "our offer" and said while she's had no recent negotiations with Treasury Secretary Steven Mnuchin, the administration's chief bargainer, "I'm sure that they'll come with something."
White House officials released a statement of their own. It said the legislation Pelosi unveiled Tuesday is "more concerned with delivering on longstanding partisan and ideological wishlists than with enhancing the ability of our Nation to deal with the public health and economic challenges we face."
HOUSE VOTE TODAY
Senate Majority Leader Mitch McConnell, R-Ky., said later Thursday on Fox News that there was a "high likelihood" Congress would do another bill and said it would include GOP-sought language limiting legal liability for companies reopening for business. He added, "But it's not going to be a $3 trillion left-wing wish."
On Thursday, Senate Democratic leader Charles Schumer of New York said it's inevitable that Republicans will negotiate. He would like Mnuchin to remain in a leading role.
"In the last two bills, they sat on the sidelines at the beginning, said our way or no way, and then they had to come to the table," Schumer said on CNBC. "Steve Mnuchin was a very positive and powerful force, bringing them in that direction because he knew we had to do stuff for the economy -- and the bill for all the partisanship passed 96-0."
The Democratic bill would provide nearly $1 trillion to help financially struggling state and local governments, extend special unemployment benefits and direct payments to individuals, and bolster spending for health care programs and essential workers.
The House plans to approve the measure today, which would be Congress' fifth and largest bill aimed at nursing the economy through the coronavirus crisis.
While conservatives in and outside Congress have urged White House officials to be cautious and ensure that any money to states is directed toward pandemic-related items, budget experts say it will be difficult, if not impossible, to prevent funding from being redirected by state leaders or used for unrelated programs.
"We're weighing in heavily, saying 'Don't spend trillions on Nancy's wish list,'" said David McIntosh, the president of the Club for Growth, a conservative advocacy group. He and others on the right will be closely watching to ensure that states with budget issues that preceded the pandemic are not given a major federal lift, McIntosh said.
The White House said in a statement that it remains focused on tax cuts and cutting regulations.
"The federal government and American taxpayers are not bailing out anyone," said Judd Deere, a White House spokesman. "As President Trump has said, we are going to continue to take bold, aggressive action to help those most impacted by this unforeseen enemy so that we emerge from this challenge with economic prosperity, which is why the White House is focused on pro-growth, middle-class tax and regulatory relief."
White House economic adviser Kevin Hassett told reporters on Thursday that the administration is studying additional state aid but has not reached a "firm conclusion" on how to proceed.
STATE REVENUE CRISIS
Less clear is whether Trump will support another round of direct payments to Americans after the $1,200 stimulus check payments previously approved by Congress. While three people involved in discussions with Trump said he is open to it, senior White House officials insisted that the president is not leaning in that direction and is more willing to discuss money for states than more direct payments, at least at this time.
Publicly, Trump has expressed ambivalence about providing hundreds of billions in additional funding to states and been noncommittal when asked about another round of stimulus payments.
"I don't think the Republicans want to be in a position where they bail out states that are, that have been mismanaged over a long period of time," Trump told the New York Post this month. "You look at Illinois, you look at New York, look at California, you know, those three, there's tremendous debt there."
Yet Republican opposition to state bailouts on Capitol Hill has softened in recent weeks as the economic crisis leads to budget nightmares for local governments across the country. A number of states run by Republican governors are also facing severe budget shortfalls and are asking for assistance.
"Most Senate Republicans" are now ready to accept additional state aid, said Brian Riedl, senior fellow at the Manhattan Institute, a libertarian-leaning think tank, citing conversations he had with more than a half-dozen Republican Senate offices.
States across the country are bracing for significant budget cuts as demand for government services increases and tax revenue plummets due to a drop in economic activity. The Economic Policy Institute, a left-leaning think tank, said this week that state and local governments could see revenue shortfalls of nearly $1 trillion by 2021.
Nearly 1,000 firefighters have been furloughed or laid off nationwide, according to the International Association of Fire Chiefs, with another 30,000 possible this year or next.
The $2 trillion coronavirus relief package Congress approved in March included hundreds of billions of dollars to increase unemployment insurance benefits, send direct payments to tens of millions of Americans and provide immediate relief to small business nationwide.
It included more than $500 billion in tax cuts, including a payroll tax holiday for employers and tax incentives for employers who keep workers on the payroll. Republicans used the must-pass legislation to make tax code changes they had sought for years. All Senate Democrats voted for the legislation.
"The White House is telling all of us they want to get a payroll tax [cut] through the end of the year and provide some capital gains breaks and incentives for businesses to bring their supply chains back to this country," a veteran Republican close to Trump said. "They say if they can get some of that for money for states that's relatively controlled, they'll look hard at that kind of deal."
In addition, the veteran Republican and White House officials said, Trump and Senate GOP leaders are looking at liability protections for business and discussing whether new policies should be included in legislation or done through regulatory changes in the executive branch.
SHIELD AGAINST CLAIMS
Key GOP senators are circulating drafts of legislation to set up legal protections they say would give businesses the confidence to reopen without worrying about lawsuits.
"It seems intuitive to me that if you're a marginal small business and you're making the decision whether to hang in there and try to survive, or whether you're just going to give up and either declare bankruptcy or just become insolvent, that this ... could make the difference," said Sen. John Cornyn, R-Texas.
Cornyn is working on legislation that would shield businesses from liability over coronavirus-related claims as long as they comply with government guidelines. And McConnell has described the potential for a "second pandemic" of litigation.
One idea circulating among lawmakers has included tying the amount of aid allocated to each state to that state's revenue losses since the pandemic began, according to two outside advisers to the White House.
Lawmakers are also looking at modifying a pot of $150 billion already approved by Congress to allow states to use it for spending needs unrelated to the coronavirus, which would ease their immediate fiscal crunch.
Sen. John Neely Kennedy, R-La., and six other Republican senators went to the White House on Tuesday afternoon after Kennedy requested a meeting with Trump on funding flexibility for states. The Republican senators were not directly pitching Trump on more money for state and local governments, but rather looser restrictions on how the money that is already out the door can be used.
"When it comes to taxpayer money, I am cheap. I'm tight. I squeak when I walk," Kennedy said Wednesday. But "it is clear to me that just as shutting down the economy has impacted people and businesses, it's impacted state and local governments" that have to pay essential personnel and services.
Information for this article was contributed by Robert Costa, Jeff Stein, Seung Min Kim and Erica Werner of The Washington Post; and by Alan Fram, Andrew Taylor and Jill Colvin of The Associated Press.
A Section on 05/15/2020