Biden’s stimulus may have just saved NYC – and countless state and local governments

Snowballs, New York City
A student in New York City throws a snowball during a snow storm in Times Square.

  • The recently passed $1.9 trillion stimulus plan contains $350 billion in state and local aid.
  • That includes $5.6 billion for New York City, which has been seeking federal aid.
  • Many local governments have warned of drastic budget cuts absent funding from the federal government.
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An ominous question lingered over much of 2020 and early 2021: What will happen to all the cities and states facing huge revenue shortfalls from the coronavirus recession?

Most famously, some commentators have gone so far as to say 2020 killed New York City, a metropolis in which interpersonal contact is a fact and a way of life. Some Wall Street executives voted with their feet late in the year, moving to Florida along with some of their operations.

The recently signed $1.9 trillion stimulus may have just solved the issue, pumping billions of dollars into not just New York but state and local governments across the country; it spends $350 billion on state and local governments, to be exact.

The package targets areas that saw higher levels of unemployment over the last three months of 2020. According to a Fitch report, it will significantly boost near-term revenues for states, local governments, transit systems and education providers.

According to Fitch, $195.3 billion will be allocated to the states and the District of Columbia; $25.5 billion of that is divided up evenly, and the rest is allocated based on unemployment numbers. That means the states of New York, California, Texas, and Florida are all set to receive more than $10 billion each. In addition, local governments are set to receive $130.2 billion, with $45.6 billion allocated for cities.

A Bank of America Research note said New York state will receive $12.7 billion, its local governments will get $10.6 billion, and New York City will get $5.6 billion.

Tribal governments are set to get $20 billion in direct aid, as well as $11 billion more for other programs including healthcare, housing, and education. It’s the government’s largest-ever investment in Native communities, according to the Senate Committee on Indian Affairs.

Relief for a financially ailing New York

Last year, New York Gov. Andrew Cuomo demanded $15 billion in federal aid. As the Associated Press reports, Cuomo said he would pursue some form of legal action if the aid wasn’t sent, while warning that that New York’s highest earners would face the country’s highest income tax if the White House didn’t step in with aid.

In his preliminary budget for fiscal year 2022, Mayor Bill de Blasio said the city had seen a $1.5 billion decline in revenue and property tax revenue fall by $2.5 billion – the largest drop since 1996.

Per BofA, sales tax collections in New York City were down 6% year-over-year in January, but there’s been an almost 22% overall year-over-year drop in collections since March, a sharp contrast with other areas of the state seeing an increase in collections.

Beyond these declining revenues, de Blasio said the city had spent $5.9 billion on “COVID-19 related expenses,” with $1.3 billion not covered by federal reimbursement at the time. He added that the state’s proposed budget cuts of $8 billion could mean $4 billion in cuts for the city.

“With direct local aid, New York City can be made whole again,” de Blasio said.

Economists have previously warned about the dangers of not including state and local aid in the stimulus packages of 2020 and 2021. As Insider’s Ben Winck and Joseph Zeballos-Roig reported, a lack of state and local aid after the Great Recession slowed growth for years afterward – plaguing Barack Obama’s presidency and economic recovery with state cutbacks. Economists feared it could happen again this decade if that aid wasn’t included in future packages.

In February, every elected Democratic state treasurer called on the federal government to include the $350 billion in state and local aid in the stimulus.

“We are cutting costs, whether it’s at the state or local level,” Wisconsin state treasurer Sarah Godlewski previously told Insider. “We are being scrappy, and figuring out how we can reallocate resources in ways that we’ve never imagined before.”

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White House economic advisor breaks with Trump and says he’s ‘not so sure we need this massive stimulus bill’

Stephen Moore
Stephen Moore.

  • Economic advisor Stephen Moore said he’s “not so sure we need this massive stimulus bill” with $2,000 checks on the line.
  • After Congress finally passed the second coronavirus stimulus relief package, which included $600 checks, President Donald Trump urged lawmakers to reach a deal on $2,000 checks for Americans.
  • Economic recovery is not dependent on the stimulus, Moore suggested.
  • “We just need to get the vaccine out there,” he said. “And we need to get the businesses open in New York City and Los Angeles and Chicago and San Francisco.”
  • Visit Business Insider’s homepage for more stories.

Stephen Moore, an economic advisor to President Donald Trump, is arguing against a “massive stimulus bill,” according to The Hill.

In an interview with businessman John Catsimatidis on his WABC 770 AM radio show, Moore said the economy’s recovery is not dependent on the pandemic legislative relief package. It will recover “without all of this government spending,” he said, according to The Hill.

“I’m not so sure we need this massive stimulus bill,” Moore said. “We just need to get the vaccine out there. And we need to get the businesses open in New York City and Los Angeles and Chicago and San Francisco.”

The vaccine rollout effort began mid-way through December, immediately after Pfizer and BioNTech’s vaccine received approval from the Food and Drug Administration. 

But only about 3.5 million doses have been given out then. Business Insider’s Susie Neilson previously reported that the vaccine rollout has been slower than anticipated, and at this rate, it will take nine years to reach widespread vaccination. 

Also in December, after monthslong negotiation and delays, lawmakers finally reached a deal on another coronavirus stimulus package. It came with $600 direct checks for taxpayers, in an effort to offset some of the financial devastation brought on by the coronavirus pandemic. This was the second relief package since March, when Trump signed a bill that included $1,200 direct payments to Americans.  

Since the second bill, Trump has urged Congress to come to an agreement that includes $2,000 checks for Americans. House Democrats immediately pounced on the suggestion, but Senate Majority Leader Mitch McConnell has repeatedly shut it down. Friday became the fourth day in a row that Senate Republicans, led by McConnell, blocked the House-passed bill that includes $2,000 checks. 

This isn’t the first that time Moore has broken with Trump on stimulus. Earlier this week, Moore said the government, with the $2,000 push, is “spending money like it’s M&Ms.”

“Let me first go on record and say, it’s absurd, the $2,000 checks,” Moore said. “It’s not a way to stimulate the economy,” he argued, warning, “We are passing these costs onto our children and grandchildren.”

Moore’s remarks also contradict warnings from Fed Chair Jay Powell, who said in October that the economy might falter if another stimulus package didn’t make it through Congress. 

“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said in a speech. Powell has consistently urged Congress to pass a stimulus package to help the economy recover from the devastation brought on by the coronavirus.

The White House did not immediately respond to a request for comment from Business Insider asking about Moore’s comments. 

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Some Democrats are ready to give up on demands for state and local aid to get a COVID-19 stimulus bill passed, report says

dick durbin chris coons amy klobuchar
Democratic Sens. Sen. Chris Coons (L) and Dick Durbin (R) in Washington DC in February 2018.

  • A number of Democrats have signaled they may drop demands for state and local government aid in a forthcoming COVID-19 stimulus bill, according to multiple reports.
  • The Associated Press reported that Dick Durbin and Chris Coons would back a slimmed-down $748 billion compromise deal which omits the support.
  • The bipartisan group trimmed off the parts that Republicans and Democrats had been finding hardest to agree on: state and local government aid, and legal protections for businesses. 
  • These now form part of a separate $160 billion proposal, which has less chance of passing. 
  • Durbin said: “I’m not giving up on funding for states and localities,” but said he backed the $748 billion proposal without them for now.
  • Visit Business Insider’s homepage for more stories.

Some senior Democrats are preparing to drop their insistence on immediate support to state and local governments in order to move a COVID-19 stimulus deal along, the Associated Press (AP) reported

Both Senate Democratic Whip Dick Durbin and Biden confidante Sen. Chris Coons signaled on Monday that they would back the scaled-back deal of $748 billion, the AP said.

House Speaker Nancy Pelosi continues to press for it to be included. 

The AP also noted that several Democratic figures attended the press conference announcing the smaller package, suggesting growing support. 

A bipartisan group of lawmakers who have spent the last weeks crafting a $908 billion relief proposal divided it into two sections on Monday in order to give some aspects a better chance to pass both the House and the Senate. 

The proposal now consists of a $748 billion proposal containing measures that are largely agreed on across the board, including support for education, vaccine distribution, and unemployment insurance.

A second, $160 billion proposal separates off the two most contentious aspects to be addressed: liability protections for businesses in the pandemic (demanded by the GOP) and support for state and local governments (demanded by Democrats).

The group – which includes Sen. Mitt Romney (R-UT), Sen. Joe Manchin (D-VA), and Sen. Susan Collins (R-ME) – dubbed their proposal a “Christmas miracle”.

Read more: Lawmakers just unveiled the text of their ‘Christmas miracle’ coronavirus stimulus. Here’s what’s in the latest attempt to provide relief. 

The proposal is being presented as a stopgap measure to get some support out over Christmas, with further negotiations expected when President-elect Joe Biden takes office. 

Meanwhile, Pelosi – who backed the bipartisan plan when it stood at $908 billion and contained provision for state and local aid – continues to press for it. She spoke to Treasury Secretary Steven Mnuchin by phone Monday evening about it, according to the AP. 

She had earlier suggested that she would be willing to compromise on business liability protections, as long as they do not harm workers’ rights. 

But that stance may be fading across the party.

In a statement emailed to media outlets, Durbin backed the $748 billion deal and said he was “disappointed” that state and local government funding couldn’t be agreed as part of it. He insisted he was not dropping the issue for good.

“This package does not include everything I think we need,” he wrote, adding: “I want to be clear: I’m not giving up on funding for states and localities.

“[…] While the fight continues over these issues, we must provide some emergency relief for the American people before we go home for the holidays.”

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Sen. Manchin says he hopes coronavirus relief bill will come by tomorrow, but there’s ‘no guarantee’ it will get passed by Congress

Joe Manchin
  • Sen. Joe Manchin said on Sunday that he hoped the coronavirus relief bill will be available by tomorrow, but added there would be “no guarantee” on whether it would be get passed in congress. 
  • In an interview with “Fox News Sunday,” Manchin said, “the plan is alive and well, and there is no way we’re going to leave Washington without taking care of the emergency needs of our people.”
  • Congress passed a spending bill on Friday to earn another week to negotiate a coronavirus relief package, but lawmakers have remained gridlocked over a stimulus deal.
  • The stakes of not being able to pass a coronavirus relief package are immense. As Business Insider previously reported, one report forecast that 12 million Americans could lose unemployment benefits if lawmakers cannot come to a consensus and pass the bill. 
  • Visit Business Insider’s homepage for more stories.

Sen. Joe Manchin of West Virginia said on Sunday that he hoped the coronavirus relief bill will be available by tomorrow, but added there would be “no guarantee” on whether it would be get passed in congress. 

In an interview with “Fox News Sunday,” host Chris Wallace pressed Manchin on whether it was possible a coronavirus relief bill would not pass before the end of the year. 

“The plan is alive and well, and there is no way we’re going to leave Washington without taking care of the emergency needs of our people,” said the Democratic senator, who is among a bipartisan group of lawmakers who introduced a $908 billion coronavirus stimulus plan earlier this month.

“Everybody’s not gonna get what they want – we can get something we could all live with. But we’re putting a product forward, it’s going to go forward with both, with everything,” he said. “Hopefully in it, you’ll see a complete bill tomorrow before the end of the day. Then you can choose if you like it or not – vote for it or vote against [it].”

However, when pressed on whether it was feasible that the bill was passed in congress, he responded there was “no guarantee” this would be the case.

Congress passed a spending bill on Friday to earn another week to negotiate a coronavirus relief package, but the coronavirus stimulus deal still faces several obstacles.

Senate Majority Leader Mitch McConnell has not endorsed the proposed $908 billion stimulus deal, and his staff said that Republican lawmakers sought greater liability protections for businesses and did not agree with the state and local funding proposals in the bill, The New York Times reported.

The deal does not include another round of stimulus checks, despite calls from progressive lawmakers including Rep. Alexandria Ocasio-Cortez calling for $1,200 direct stimulus payments to Americans, Business Insider’s Kimberly Leonard previously reported.

Earlier this week, the White House proposed a $916 billion stimulus proposal with $600 stimulus checks. However, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer in a joint statement described the White House proposal cutting down unemployment spending by around $140 billion from the initial bipartisan proposal as “unacceptable.” 

The stakes of not being able to pass a coronavirus relief package are immense. One report from the Century Foundation showed approximately 12 million Americans could lose unemployment benefits before the end of this month if lawmakers can’t come to a consensus to pass a coronavirus relief bill. In addition, as Business Insider’s Joseph Zeballos-Roig reported, an eviction moratorium will expire before the year is over, risking the loss of homes for 30 to 40 million renters.

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Bernie Sanders said he would vote against the bipartisan $908 billion stimulus bill ‘unless it is significantly improved’

GettyImages bernie sanders
Sen. Bernie Sanders (I-VT) arrives at the Capitol on October 20, 2020.

  • Sen. Bernie Sanders said he “can’t support” the $908 billion bipartisan stimulus deal “unless it is significantly improved.”
  • House Democrats recently came out in favor of the coronavirus relief package to end the lame-duck session and get federal aid out to Americans quickly. The plan, however, does not include another round of $1,200 stimulus checks.
  • “While the COVID crisis is the worst it has ever been, Manchin-Romney not only provides no direct payments, it does nothing to address the healthcare crisis and provides totally inadequate assistance for the most vulnerable,” Sanders wrote in a follow-up tweet. “That’s wrong morally and it’s wrong economically.”
  • Visit Business Insider’s homepage for more stories.

Sen. Bernie Sanders said Friday that he “can’t support” the $908 billion bipartisan stimulus deal “unless it is significantly improved.”

The senator from Vermont slammed the bipartisan bill in a chain of tweets Friday night, writing that the proposed bill “provides 100% legal immunity to corporations whose irresponsibility led to the deaths of hundreds of workers.”

“It would continue to provide a get-out-of-jail free card to companies that put the lives of their workers at risk,” he wrote, adding that at least $1,200 stimulus checks were necessary “to pay the rent and feed their families.”

Read more: The $908 billion coronavirus stimulus deal could be the next one Congress passes: Here’s what’s in the relief package and what you could get

The bipartisan bill was led by GOP Sens. Mitt Romney and Susan Collins, as well as Sen. Joe Manchin, a Democrat from West Virginia. House Democrats recently came out in favor of the coronavirus relief package to end the lame-duck session and get federal aid out to Americans quickly.

The plan, however, does not include another round of $1,200 stimulus checks.

“While the COVID crisis is the worst it has ever been, Manchin-Romney not only provides no direct payments, it does nothing to address the healthcare crisis and provides totally inadequate assistance for the most vulnerable,” Sanders wrote in a follow-up tweet. “That’s wrong morally and it’s wrong economically.”

Read more: Brad Parscale starts talking. Trumpworld frets.

Though Sanders asserted that he would vote against the bill, he emphasized the urgency of distributing aid to Americans who took the economic brunt of the pandemic, writing that “we must make sure every working class American receives at least $1,200 and that we don’t give legal immunity to corporations who break the law.”

“I will not support Manchin-Romney in its current form,” Sanders wrote. “We must fight together to improve it.”

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