McConnell digs in on demand to drop state 'bailouts' from coronavirus bill, accuses Democrats of blocking agreement

In comments on the Senate floor Friday morning, Senate Majority Leader Mitch McConnell dug in on Republicans' demand that Democrats drop funding for state and local governments from any coronavirus relief bill.

The comments are the latest sign that talks of an economic stimulus – which congressional leaders had previously expressed optimism about – may be falling apart.

"Struggling families, exhausted health workers and anxious small-business owners are waiting, waiting for the Senate to do what I have tried to accomplish over and over for months: pass a significant, targeted COVID relief bill," McConnell said.

He said that Republicans have offered to set aside their demand that a relief bill include liability protections for businesses against lawsuits regarding the coronavirus in exchange for Democrats dropping their demand for "bailouts" of state governments.

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"In what universe should emergency aid for small businesses be contingent, contingent on massive bailouts for state governments with no linkage to actual needs?" McConnell said. He added that some "states ... are currently raking revenue faster than they can spend it."

"[Democrats] will get to explain to a restaurant owner that Democrats didn't let her get a second PPP loan to save her business because her governor needed a special slush fund," McConnell continued. "Or explain to a laid-off worker that his relief program may expire completely because Democrats didn't feel it was urgent. Or explain to an older couple who have hunkered down and survived this long year that their vaccines will arrive later than necessary because Democrats didn't let us fund distribution."

McConnell's claims are disputed by the National Governors' Association (NGA), which, along with associations for local governments, has been calling for more funding from Congress nearly since the CARES Act was passed in March.

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"The need for Congress to act is growing — coronavirus cases are rising in 38 states, and large employers are making significant layoffs, with nearly 900,000 people filed new unemployment claims filed last week alone," the NGA said in October. "Without additional funds and increased flexibility from Congress to use these funds, some states and territories will be forced to cut services and consider substantial layoffs."

Senate Minority Leader Chuck Schumer, D-N.Y., on Thursday reinforced Democrats' in favor of funding for state governments.

"You’ll hear voices saying Democrats want to fund state and local services, while Republicans—that is, Leader McConnell—want a corporate liability shield; each side wants something that the other side doesn’t want to accept," Schumer said on the Senate floor. "But as I said, this is [a] false equivalency—incredibly false."

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Schumer added: "When we talk about providing federal aid so that states don’t have to cut essential services, we’re talking about saving lives and we’re talking about saving jobs. We’re talking about boosting the economy. According to the Congressional Budget Office, money for state and local government creates the best bang-for-the-buck for the economy from any spending Congress is considering."

Democrats have complained that Republicans have been unwilling to accept a higher price tag on a stimulus while they've come down on their price demands. Republicans, however, have criticized past Democrat stimulus proposals as filled with items unrelated to the pandemic. Even when President Trump has called for stimulus bills with a high price tag, McConnell has said he does not have enough votes in his caucus to go for a large bill.

The bad news for stimulus negotiations, however, come as there was good news Friday morning on the possibility that Congress may avert a government shutdown at midnight Friday into Saturday. Sen. Rand Paul, R-Ky., said that he would not hold up a defense authorization bill, clearing the way for the Senate to consider a stopgap measure to keep the government funded for another week.

Now the Senate will just have to get around threats from Sen. Bernie Sanders, I-Vt., to delay that funding bill over demands that it includes $1,200 in stimulus checks for individual Americans. Sanders did not commit either way when asked if he would hold up the vote.

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"We'll have to see what happens," Sanders said.

Congress is not expected to be able to get to coronavirus relief funding until at least the middle of next week. On Thursday, House Majority Leader Steny Hoyer, D-Md., advised members that votes on a coronavirus relief proposal and an omnibus spending bill could happen "as early as 6:30 p.m. on Tuesday, December 15th," but that the schedule beyond that could be "very fluid."

The House and Senate may also be forced to override a Trump veto of the military authorization bill before getting to coronavirus relief. The bill does not include a repeal of Section 230 of the Communications Decency Act and it does include a provision to rename military bases named after Confederate leaders. Trump has threatened a veto over both topics.

Fox News' Chad Pergram and Jason Donner contributed to this report.