States and cities are trying to aid their small businesses, but with their own strapped budgets, can only do so much to stave off disaster without federal assistance.
States and cities are trying to aid their small businesses, but with their own strapped budgets, can only do so much to stave off disaster without federal assistance. (Shutterstock)

Senate Majority Leader Mitch McConnell refuses to get much-needed aid to cities and states across the country, running the risk of an even greater economic catastrophe this winter.

As the American economy falls apart, states and cities are doing what they can to aid residents and small businesses through the crisis, but those efforts continue to be hampered by a lack of federal help. 

Sen. Majority Leader Mitch McConnell’s staff told congressional leaders on Wednesday that the latest negotiations over a $908 billion coronavirus relief bill are unlikely to appease Senate Republicans, Politico reported Thursday. The Kentucky Republican’s staff said that efforts to reach a compromise by providing $160 billion in state and local aid—a Democratic priority—and temporarily protecting corporations from lawsuits brought by employees or customers exposed to COVID-19—a Republican priority—would not be enough for the Senate GOP. 

This latest setback deals yet another blow to a seven-month long battle over additional coronavirus aid that has seen Republicans repeatedly refuse to help struggling state and local governments, whose tax revenues have plummeted amid the pandemic. While the federal government can run budget deficits, nearly all state and local governments are legally required to balance their budgets, a reality that has forced them to make budget cuts, issue furloughs and layoffs, and reduce services during the pandemic. 

The vacuum created by federal inaction has left countless small businesses on the brink of collapse and tens of millions of Americans in dire economic straits, all while the coronavirus pandemic spirals out of control, killing thousands of people per day.

Despite their own budget woes, some states and cities are doing what they can to protect residents and community members. California established a “rebuilding” fund in November, directing some public funds to provide loan guarantees in order to encourage lenders to make low-interest loans to the state’s smallest businesses that may not have been helped by the federal Paycheck Protection Program. The state also established a $500 million grant program for small businesses. 

Colorado lawmakers also passed a $342 million economic relief package last week, including help for small businesses, food pantries, childcare providers, renters, and landlords. In Washington DC, Mayor Muriel Bowser announced this week that the city would provide one-time $1,200 stimulus checks to roughly 20,000 unemployed residents currently receiving benefits under the Pandemic Unemployment Assistance (PUA) program, which is set to expire at the end of the year. The PUA program provides benefits to workers who don’t usually qualify for state-level unemployment benefits, including gig workers, self-employed individuals, and independent contractors. 

But these efforts represent just a drop in the bucket of what’s needed across the country, and state and local leaders are pleading for federal aid. The bipartisan National Governors Association (NGA) has repeatedly urged the federal government to provide $500 billion in relief funds to states, noting that the failure to provide aid could lead to the loss of more than 4 million jobs and a massive decrease in economic output.

“It is time for Washington to step up and deliver desperately needed relief for their constituents,” New York Governor and NGA Chairman Andrew Cuomo and Arkansas Governor and NGA Vice Chairman Asa Hutchinson said in a statement last week. “This is a national crisis, cutting across geographic, economic and demographic lines, and it demands a national, bipartisan solution. Congress should not leave Washington for the holiday recess without enacting a much-needed COVID relief package.”

Ohio Gov. Mike DeWine, a Republican who recently used some federal funds from March’s CARES Act to create a new batch of grants to restaurants, bars, and other businesses affected by the pandemic, made similar comments.

“We have done what we can do to pump money into small businesses so that people can continue to work,” DeWine told the New York Times. “From the jobs point of view and the economy point of view and the workers’ point of view and small businesses, we’ve got to get that help from the federal government. That’s the only place we can get it.”

A bipartisan group of mayors across the country have issued similar pleas, requesting help, but those pleas have largely fallen on deaf ears. In the absence of help, many small businesses are at risk of shedding jobs or failing altogether, which would further deprive state and local governments of tax revenues, further limiting an economic recovery.

“It becomes almost a death spiral if you can’t keep these businesses running,” Tim Goodrich, executive director of state government relations for the National Federation of Independent Business, told the Times.

Sen. Minority Leader Chuck Schumer laid bare the cost of inaction during a speech on the Senate floor on Thursday. 

“When we talk about providing federal aid so the states don’t have to cut essential services we’re talking about saving lives and we’re talking about saving jobs,” Schumer said. “It’s about firefighters getting laid off. It’s about first responders getting laid off. It’s about teachers getting laid off, bus drivers, sanitation workers, essential employees, men and women who have been working since the pandemic began and risking their lives to keep our country moving…Make no mistake, right now, there’s one person, just one person standing in the way and that is Leader McConnell.”