President Trump complained last week that providing additional federal funding to help states recover from the coronavirus crisis would be unfair to Republicans “because all the states that need help — they’re run by Democrats in every case.”
At the same time, Trump said that “reimbursing for the plague” would be different than bailing out states “that have been mismanaged over a long period of time” — essentially leaving the door open to possibility of providing some additional relief, albeit perhaps with some additional conditions as well.
Now The Washington Post reports that White House officials believe — and have privately signaled — that they’d be willing to provide tens of billions of dollars to states in order to secure wins on some of their priorities, like tax breaks and liability protections for businesses, in negotiations with Democrats. The president is reportedly more open to the idea of state aid than to another round of direct payments to individuals.
Trump really wants more tax cuts: “The White House is telling all of us they want to get a payroll tax 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,” one unnamed source — a “veteran Republican close to Trump” — told the Post. “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.”
A deal still won’t be easy: The tens of billions of dollars cited by the Post is still far short of the $500 billion that the National Governors Association has called for, which is the amount provided states in the $3 trillion package introduced by House Democrats this week. And lawmakers, including many Republicans, will likely resist the White House’s tax cut proposals, which many say aren’t targeted to those most affected by the pandemic and economic shutdown.
Another potential obstacle: While White House officials have reportedly assured conservative leaders that any new money will be directed only toward addressing pandemic-related issues, that’s easier said than done, the Post’s Robert Costa, Jeff Stein and Seung Min Kim write: “budget experts say it will be difficult, if not impossible, to prevent funding from being redirected by state leaders, or used for unrelated programs.”
More aid to states is likely, but how much? Trump will face increasing pressure to provide more money to help states plug budget holes ripped open by the pandemic, and to give states more flexibility in how they use the funding already provided. Some of that pressure will come from Republican governors and lawmakers pressing for help. Concerns about perilous state finances and potentially severe cuts to services ahead of the November election will only add to the pressure.
“With those political considerations at the mind, some top Republicans have privately shifted from opposing new cash for states altogether to limiting the package’s size and scope,” the Post says. “One idea circulating among lawmakers has included tying the amount of aid allocated to each state to its revenue losses since the pandemic began, said two outside advisers to the White House.”