News & Media
Coronavirus April 27 Update: Small Business Loans Resume, States Plead for Aid & an Interview With Nevada Senator Catherine Cortez Mastro
Senator McConnell, states clash over aid
The dispute over coronavirus aid to state and local governments now looks like all-out war.
Breaking with President Donald Trump, Senate Majority Leader Mitch McConnell, R-Ky., declared his opposition last week to direct federal aid for states and localities strapped for cash during the economic shutdown. Trump said last week he favored such aid as part of the next relief package already being planned to combat the COVID-19 pandemic.
But McConnell said states suffering from a revenue drain should consider filing for bankruptcy instead of relying on help from Washington. "I would certainly be in favor of allowing states to use the bankruptcy route," he said on conservative commentator Hugh Hewitt's radio program.
"My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don't have to do that," the senator said. "That's not something I'm going to be in favor of."
New York Gov. Andrew Cuomo, whose state is the U.S. epicenter of the pandemic, was quick to offer a sharp rebuke to McConnell.
"I dare you to do that," Cuomo, a Democrat, said at a news conference in remarks directed to McConnell. "You want to send a signal to the markets that this nation is in real trouble? You want to send an international message that the economy is in turmoil? Do that. Allow states to declare bankruptcy legally because you passed the bill. It'll be the first time in our nation's history that that happened."
Congress provided $150 billion to states and localities as part of a roughly $2 trillion relief package last month (PL 116-136). But that money was allocated to fight the coronavirus, not to make up for lost tax revenue.
Governors and mayors across the country are warning that budgets will need to be slashed without federal intervention. Those cuts would mean putting thousands of teachers, police, emergency medical technicians and other public employees out of work. No state or local aid was included in the latest relief package last week (PL 116-139).
Speaker Nancy Pelosi promised state and local aid would be provided "in a very significant way" in the next relief bill. "The governors are impatient," the California Democrat said on CNN's "State of the Union" program Sunday. "They should be impatient. Their impatience will help us get an even bigger number."
Some in the GOP are working on legislation to help state and local governments. Louisiana Republican Sen. Bill Cassidy and New Jersey Democratic Sen. Bob Menendez unveiled a proposal last week calling for $500 billion to help local governments. Jim Saksa has the full story here.
Small-business loans have resumed
A popular small-business loan fund that burned through its cash in less than two weeks will begin anew Monday.
Trump signed a coronavirus relief package Friday (PL 116-139) that replenishes the Paycheck Protection Program, which offers forgivable loans to small businesses that retain most of their workers during the economic shutdown. The legislation adds $310 billion in loans to the $349 billion already consumed.
"The PPP has supported more than 1.66 million small businesses and protected over 30 million jobs for hardworking Americans," Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza, said in a joint statement. "With the additional funds appropriated by Congress, tens of millions of additional workers will benefit from this critical relief."
But even the new money may not be sufficient for long, some experts have warned. Through last week, nearly 1.7 million small businesses received aid, the SBA reported. According to the latest Census Bureau data there were close to 6 million employers with 500 or fewer workers, not counting other firms that meet the criteria.
Sen. Marco Rubio, R-Fla., a key architect of the new program, said Friday there would be an "additional significant amount of money," beyond what's provided in the latest legislation. He tweeted that more loans would be made available from money "returned by several publicly traded large companies."
Large restaurant chains such as Shake Shack won loans that lawmakers said were designed for small businesses. Shake Shack has promised to return the federal money.
The Senate approved the relief bill Tuesday by voice vote, with the House following Thursday by a lopsided 388-5 vote.
Virus contact tracing lacks funding
Tracking new cases of COVID-19 patients and their contacts will require an army of public health workers and still more funding, experts said.
The latest coronavirus relief package (PL 116-139) included $25 billion for testing. But contact tracing, in which public health officials track and alert individuals who were exposed to COVID-19 patients, is a manpower-intensive exercise. The United States would need at least another 100,000 workers to adequately track person-to-person transmissions, according to a Johns Hopkins University estimate.
If the workers are paid the average community health salary of $17 per hour, a full-time, one-year workforce would cost around $3.6 billion. Experts estimate the total price tag may reach $5 billion after factoring in the costs of training and paying for more experienced disease investigators.
The lack of contact tracers is just one component of a long, slow decimation in public health investment. Ravina Kullar, an expert with the Infectious Disease Society of America and University of California Los Angeles adjunct faculty member, called tracing a "cornerstone" of preventive medicine. Lauren Clason has the full story here.
Treasury seeking equity stakes in companies receiving relief aid
The Treasury announced plans to seek equity stakes in companies such as Boeing Co. if they want a loan from the $17 billion set aside for them in coronavirus relief aid.
A roughly $2 trillion aid package enacted last month (PL 116-136) allows up to $17 billion in loans "for businesses critical to maintaining national security." A loan application posted on the Treasury's website said companies should apply by Friday, although it left room for extending the deadline.
The wording of the provision doesn't name any specific companies and could involve any number of defense contractors and others who fit the criteria. But the economic shutdown triggered by the virus has brought airline traffic to a virtual standstill, hitting Boeing, which makes commercial aircraft as well as military hardware, particularly hard.
"Boeing's going to need some help," Trump told reporters at a press conference last month.
But Boeing Chief Executive Officer David Calhoun told Fox Business at the time that his company may not seek a loan if it requires letting the federal government take an equity stake in the nation's top airplane manufacturer.
"I don't have a need for an equity stake," he said. "If you attach too many things to it, of course you take a different course," Calhoun said of a possible loan.
The Treasury, however, appeared to leave itself some wiggle room. The loan application said an equity stake would be sought "unless the Secretary determines in his discretion that the Borrower cannot feasibly issue warrants or other equity interests."