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Significant bipartisan support has emerged in Congress for another round of stimulus, including a chunk of money in the form of aid to state and local governments following a weekend of rioting and looting in more than 140 cities across the country, FOX Business has learned.
The official tally of damage to businesses, property and the US economy has yet to be determined. The riots — which were sparked when an unarmed black man, George Floyd, was killed during an arrest, leading to a murder charge against a white police officer — come on top of a sharp economic slowdown attributed to the coronavirus pandemic.
The economic impact of the business lockdowns that followed the spread of the virus has led to a sharp rise in unemployment, causing severe state and local budget shortfalls. Even before the unrest, Democratic House Speaker Nancy Pelosi had called for a government stimulus bill of as much as $1 trillion to be earmarked for states and cities, a move initially rebuffed by Republican Senate Majority Leader Mitch McConnell, who took the position that Pelosi's plan would bail out profligate state governments such as Illinois, which was in fiscal duress long before the pandemic hit. McConnell has also said he was hesitant to spend more money before the complete implementation of the previous stimulus bill, including the so-called Main Street Lending Program, a $600 billion plan in which the Federal Reserve can make loans to small and midsize businesses.
But the weekend's rioting, which continued through Monday as members of Congress returned to work following the Memorial Day break, has some Republicans in private conversations with business lobbyists and others conceding that a new stimulus package is likely necessary. Business lobbyists tell FOX Business that based on their conversations, the plan could include significant money directed to state governments that are suffering from the double whammy of business lockdowns and now massive costs associated with large-scale social unrest.
Those costs include everything from overtime for police, the fleeing of people and their tax dollars from large cities, to businesses struggling to reopen as the coronavirus death tally has risen above 100,000. Precise details of the next stimulus remain unclear but congressional sources say broad contours are emerging, including likely aid to states and cities of as much as $650 billion.
Congressional sources say McConnell hasn’t agreed on any new stimulus plan and could once again reject money going to states. But the mood to aid states is growing so much following the rioting that on Monday, after business lobbyists spoke with congressional aides, the message they received was that money to states would likely be coming. These lobbyists said they believed the state bailout package, if enacted, would also have "few strings attached.” That means states like Illinois will be able to use the money to fund its pension coffers, which McConnell and GOP officials had warned against, one person with knowledge of these conversations told Fox Business.
Press officials for McConnell and Pelosi didn't return telephone calls or emails for comment.
In an interview with National Public Radio on Friday, McConnell said this next phase of stimulus will be the “fourth and final stimulus” and likely won’t be passed until July. But congressional sources and lobbyists also tell FOX Business the violence unleashed across America this weekend will likely hasten legislation.
McConnell, in exchange for the government aid, could demand a business liability waiver, shielding businesses from COVID 19-related lawsuits when they reopen as many are now, these people add. Democrats may also seek another round of stimulus checks for individuals and families, said another Wall Street lobbyist who regularly consults with members of Congress.
The new stimulus plan comes after three previous rounds, costing taxpayers trillions of dollars. The Federal Reserve has also pumped an estimated $10 trillion into the economy that has halted and largely reversed the stock market’s precipitous decline even if it hasn't yet stopped the broader economy's collapse.
The nation's unemployment rate is expected to reach 20 percent this week -- levels not seen since the Great Depression. The riots and the destruction they've caused to small businesses could push joblessness even higher, business leaders say.