Is the Trump Administration About To Screw Over States In Crisis?
As businesses hit hard by the economic fallout of the coronavirus crisis continue to shutter across the country, a new report finds the Treasury Department sitting on a good chunk of the $500 billion fund created in March by the CARES Act to help businesses and local governments. According to the Washington Post, a report released Monday by the Congressional Oversight Commission, a new body created by the act to oversee how the money is being used, found that despite rushing to implement certain stimulus programs (such as $1,200 stimulus checks to eligible households and providing loans to small businesses), the Treasury Department is withholding a sizable portion of the bailout money. The recent report was the body’s first—the commission is so new that it doesn’t yet have a chair. And it raises questions about the function of the Treasury fund as the administration struggles to get a hold on reopening efforts, and encouragement to speed things along emanates from the very top.
So far, the report notes, only one of the lending facilities created by the Treasury Department to operate through the Federal Reserve has received funding. The Secondary Market Corporate Credit Facility, which is supposed to buy corporate debt, has received $37.5 billion. But none of the $46 billion set aside to make loans and loan guarantees—largely to the airline industry—has been disbursed. The Main Street Lending Program is intended to help small and medium-sized businesses. But as the report highlights, the central bank has already modified the terms of that program, even before any money from it has been lent. A Municipal Liquidity Facility geared to loan money to state and local governments has also not distributed any money yet, despite the fact that the Treasury “intends to invest $35 billion in this facility, which can support up to $500 billion in lending.” The Post notes that the Commission’s report specifically asks when both efforts will be put into action. Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell will face questions about the use of the fund during a hearing on Tuesday.
Nor is the fund the only place in which the federal response could soon fall short. As Politico reported on Tuesday, more than 40,000 National Guard workers who have been assisting in states’ efforts to test residents and track the spread of the virus could be pulled from their positions at the end of June, doubling the burden on local first responders. The Trump administration’s plans, according to a senior FEMA official, is for National Guard members to face a “hard stop” on June 24, the day before they would qualify to receive early retirement and education benefits under a GI bill. A National Guard spokesperson told the outlet that the deployment could still be extended. But states are reportedly spooked. In a letter to the president, the bipartisan Congressional delegation of Colorado requested an extension of federal funding through the end of the year with monthly assessments. “We share the Governor’s concern that prematurely ceasing federal funding for National Guard COVID-19 support operations will hinder Colorado’s ability to respond and could contribute to a possible second wave of infection,” the letter states, noting the Colorado National Guard to be “providing invaluable support for testing civilians and Guard personnel, logistics and warehouse distribution support, planning for Colorado’s Emergency Operations Centers, homelessness outreach, and much more.
And as a FEMA official noted to colleagues on an interagency call, the audio of which was obtained by Politico, the decision would “require a delicate messaging strategy” given that it would both shortchange first responders and leave states in the lurch. The two weeks of self-quarantine required of Guard members before rejoining civilian life, Politico notes, means that states could lose their services in early June. “We would greatly benefit from unified messaging regarding the conclusion of their services prior to hitting the 90-day mark and the retirement benefit implications associated with it,” the official said. The same messaging strategy could benefit the White House, which is at risk of undermining the narrative that it’s doing all it can to help states recover from the crisis.
https://www.vanityfair.com/news/2020/05/is-trump-administration-about-to-screw-over-states-crisis?utm_source=nl&utm_brand=pol&utm_campaign=aud-dev&utm_mailing=thematic_ballot_052020&utm_medium=email&bxid=5be9f8cb24c17c6adf0e5d24&cndid=25394153&utm_content=A&utm_term=Thematic_Ballot_Subscribers
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