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Rep. Neal pressing ahead with Phase Four relief package

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The White House may be trying to pump the brakes on the next round of economic relief being discussed in Congress, but U.S. Rep. Richard Neal said Monday that it’s full steam ahead for House Democrats, who want to provide more aid to state and local governments, as well as hospitals, families and the unemployed.

“We’re writing it now,” Neal told the News Service in a phone interview from Springfield on Monday afternoon.

Neal, the chairman of the House Ways and Means Committee, said he hoped the so-called “Phase Four” relief bill would be ready for consideration in the House next week, despite the White House’s top economic advisor over the weekend talking about the administration’s desire for a “pause” on stimulus spending.

Congress has already approved roughly $3 trillion in spending to support states, hospitals, businesses and families hurt financially by the measures taken to control the spread of the coronavirus. Still, states are bracing for an unprecedented decline in tax revenues as a result of widespread business closures.

In Massachusetts, the Department of Revenue is expected to issue a grim report as early as Tuesday on April tax collections, and economists and fiscal watchdogs have predicted that the state could lose between $4 billion and $6 billion in revenue next fiscal year.

“As a former mayor, I’ve been very interested in what recovery will look like and I think the best way to hasten recovery is to come to the aid of state and local governments,” Neal said Monday.

His comments came after White House economic advisor Larry Kudlow went on CNN on Sunday and said the last round of small business loans need to be given time to take root before deciding on next steps.

“There may well be additional legislation. There’s kind of a pause period right now,” Kudlow said during an appearance on CNN’s “State of the Union.”

“I don’t want to rule in or out anything right now,” Kudlow added.

Asked what that might mean for the next round of relief spending, Neal said, “I can’t believe there would be anyone opposed to a substantial relief package for states and cities.”

“I think you might be seeing a little bit of posturing now, but I’m fairly certain there will be a pretty sizable allocation coming to state and local governments,” he said.

Neal said he has enjoyed a good relationship to date with Kudlow. “We can work with him,” Neal said.

House Speaker Nancy Pelosi said last week that state and local governments have outlined as much as $1 trillion in additional needs to stabilize their finances. Neal said he didn’t know how large the next package would be, but said it’s likely to include other spending as well.

The state aid piece is being put together by the House Appropriations Committee, chaired by New York Congresswoman Nita Lowey, Neal said.

Neal said his committee is focused on providing more relief to hospitals, propping up the unemployment insurance system with more funding, and sending another round of checks to families.

“This is not really stimulus, despite the loose application of the term,” Neal said. “This is more about relief and balance. After stability, we can pivot to stimulus in the truest form, but I think you need another round of checks and more assistance for unemployment insurance.”

Neal said he envisions a second round of checks being sent to households at the same levels as before -- $1,200 for an individuals and $2,400 for a couple -- but would like to increase the amount provided for dependent children from the $500 supplied last time. He said a family of five, for instance, might qualify for as much as $5,000.

“State and local governments have to have balanced budgets,” Neal said. “The only institution that’s going to do something about this is the federal government.”

After initially saying that it might be preferable for states to declare bankruptcy, Senate Majority Leader Mitch McConnell said last week he’s “open to additional assistance” for states.

“It’s not just going to be a check, though, you get my point?” McConnell said, according to Politico. “We’re not writing a check to send down to states to allow them to, in effect, finance mistakes they’ve made unrelated to the coronavirus.”

McConnell and Senate Republicans also want to see the next bill include protections for businesses from lawsuits should they reopen during the pandemic.

Republicans in Washington are also starting to raise concerns about mounting debt as a result of the federal government’s response to the pandemic.

The Treasury announced on Monday that it planned to borrow $2.99 trillion between April and June to cover the federal government’s coronavirus response, including the stimulus checks for families and individuals, loan and grant support for businesses and changes in tax receipts as a result of the deferral of individual and business income tax filings from April until July.

The borrowing is $3 trillion more than Treasury had assumed in February would be necessary to borrow this spring.

Assistant Treasury Secretary Michael Faulkender, however, suggested that the economic collapse will be “temporary.”

“Although available data suggest that economic growth will slow further in the second quarter of 2020, we are convinced that the downturn will be temporary, given that its cause was not the result of any underlying imbalances in the economy,” Faulkender said in a statement.

Neal said now is not the time to be worrying about debt.

“When I hear them talk about fiscal probity while states are laying off cops and firefighters and teachers and trying to figure out what the school season will look like and what colleges are going to do, I think about the four major tax cuts we’ve had since the Bush administration. That’s what put us in the fiscal position that we’re in as much as anything,” Neal said.

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