President Trump warned Democrats Tuesday that he will demand “adjustments” for sanctuary cities as a condition of bailout aid for states, as both parties take increasingly partisan paths toward the next round of emergency coronavirus relief.
With Democrats demanding at least $500 billion to fill state coffers drained by business shutdowns, Mr. Trump said he doesn’t want to reward mostly Democrat-controlled states “to recover 25 years of bad management.”
“If it’s COVID-related, I guess we can talk about it,” the president told reporters at the White House. “But we want certain things also, including sanctuary city adjustments. We have so many people in sanctuary cities, which I don’t even think are popular, even by radical left folks. People are being protected that shouldn’t be protected, and a lot of bad things are happening with sanctuary cities.”
The president has sought as policy to reduce federal aid to states and cities that provide sanctuary for illegal immigrants, but hadn’t raised it before as a condition of emergency coronavirus relief. Congressional Democrats have fiercely resisted any efforts to curtail sanctuary cities.
House Speaker Nancy Pelosi said Tuesday that Democrats want $500 billion for states plus a “very big figure” of extra money for county and municipal governments. They also want more funding for Medicaid.
Mrs. Pelso also said this week that she might propose government-guaranteed income, an idea championed by failed Democratic presidential candidate Andrew Yang, in the next round of aid to help Americans through the pandemic.
“There are many more people than just in small business and hired by small business … that may need some assistance as well,” she said on MSNBC.
The president reiterated that he prefers payroll tax cuts in the next package. And White House economic adviser Kevin Hassett said the administration is considering a second round of direct payments to most Americans.
Introducing another potential poison pill, Senate Majority Leader Mitch McConnell said he will insist on shielding businesses and first responders from lawsuits by anyone getting sick at a reopened business and blaming it on violations of guidelines from the Centers for Disease Control and Prevention.
“The whole country will be afraid to go back to work, if businesses are afraid they’re going to be sued constantly,” Mr. McConnell said on the Guy Benson radio show.
Just a week ago, the Kentucky Republican said “liability shields” would be a dead end with House Democrats. He told radio host Hugh Hewitt that he foresaw an avalanche of lawsuits over coronavirus illnesses.
“If I thought there was a way to stop that practically with a Pelosi-led House, believe me, I’d be clamoring for it,” Mr. McConnell said.
The president also said Tuesday he is signing an executive order under the Defense Production Act to require meat processing plants to remain open. He is declaring the plants part of the critical U.S. infrastructure and said the action will “solve any liability problems.”
Some companies, such as Tyson Foods, were considering restricting their operations after several meat-processing plants in several states were struck by coronavirus outbreaks among workers.
Governors in both parties are pleading with Washington to provide more aid for state budgets depleted by lost tax revenue and unplanned expenses in responding to the COVID-19 crisis. But Mr. McConnell and other Republicans said they’re wary of Democratic governors and mayors using some of the emergency aid to backfill chronically underfunded union pension funds.
Pointing to the nearly unanimous support in Congress for the previous aid packages, Treasury Secretary Steven T. Mnuchin said Tuesday of the potential next round, “nothing will be done unless there is absolute bipartisan support.”
Congress and the administration have already approved nearly $3 trillion in emergency relief in less than two months, mostly for shuttered businesses and 26 million laid-off workers.
About $650 billion of that aid has been devoted to the Paycheck Protection Program, which provides grants and loans to businesses with fewer than 500 workers to keep employees on the payroll.
Mr. Trump highlighted PPP success stories at an East Room event Tuesday, countering a series of embarrassing taxpayer-funded loans for the Los Angeles Lakers and major companies such as Ruth’s Chris Steak House. The president said the grants for nearly 2 million small businesses to date are providing a lifeline to better times ahead.
“Our experts believe the worst days of the pandemic are behind us,” Mr. Trump told invited small business leaders. “You’re going to be in good shape when we open our country. We’re coming back, and we’re coming back strong.”
The president said demand is “extraordinarily high” for the new round of PPP grants, which the Small Business Administration began lending on Monday. The president said the government has processed 450,000 loan applications totaling $50 billion in the new phase.
“We’re processing loans at a pace never achieved before,” Mr. Trump said.
He called to the stage business owners such as Tony Stafford, who owns three Ford’s Fish Shack restaurants in Northern Virginia. Mr. Stafford said the shutdown “devastated” his company, forcing him to furlough more than 100 employees.
But the PPP grant enabled the company to keep paying its workers.
“It’s been awesome to be able to tell them that we’re going to weather this storm,” Mr. Stafford said.
Chris Stansbury of West Virginia Eye Consultants said the shutdown affected the firm’s 60 employees, but the PPP grant rescued them.
“It’s been a lifeline for us,” he said. “We were able to start paying our utilities, our rent and to start bringing some of those employees back.”
White House officials say the first round of small business aid, $350 billion, has helped about 30 million workers keep their jobs at a time when 26 million other Americans were laid off.
The demand was so great that Small Business Administration approved more than 1.6 million forgivable loans in less than two weeks. Companies with fewer than 500 employees can obtain up to $10 million to help keep employees on the payroll for two months.
But the program also has come under fire for giving money to employers who didn’t qualify or didn’t need the money, such as a $4.6 million loan to the NBA’s Lakers, whose team payroll for superstar LeBron James and others totals $125 million.
At least 200 publicly traded companies received about $800 million in the first round of aid, while hundreds of thousands of small businesses got shut out.
The Lakers, and some big companies such as Shake Shack, have given back their loans after a public outcry. Mr. Mnuchin said the loans involved a small number of companies.
“They were either owned by public companies, or the Los Angeles Lakers — I’m a big Lakers fan, I’m outraged that they took that loan,” Mr. Mnuchin said on Fox Business Network. “I’m glad to see they paid it back.”
The negative publicity forced the administration to announce that the Small Business Administration will review, retroactively, any loans of more than $2 million. Mr. Mnuchin said companies that shouldn’t have taken the money will be required to repay it and could be subject to criminal penalties.
“I encourage everybody to look at this and pay back these loans now so we can recycle the money if you made a mistake,” he said.
Even as the president was highlighting the success of the PPP, clogs were developing Tuesday in the lending pipeline for a new batch of emergency aid.
A banking industry source said lenders were frustrated by the SBA’s new “pacing” of applications to limit the rush and that the agency’s electronic processing system was still crashing or locking out lenders.
“The so-called ‘pacing’ mechanism SBA has put into place has been a disaster,” the source said. “Most banks get locked out after 10 minutes — results seem to be across the board, regardless of size or entry method.”
There’s also a growing backlash in some states from people still seeking unemployment benefits, including an extra $600 per week from the federal government. With more than 26 million people filing claims in less six weeks, state systems are overloaded.
Michelle Izzi, an out-of-work New Jersey resident, said the state’s online guidance for self-employed residents to file for benefits “leads to nowhere.” She created a Facebook group called #njunemploymentpandemic.
“I’ve been pending [for benefits] since April 3rd,” Ms. Izzi said in a Facebook video. “I have people in my group who’ve been pending since March 22nd. People that need simple answers cannot even get a human being on the phone. This is an outrage. I have people who are suicidal on my group.”
The president said some state agencies have “very old computerized equipment” for processing benefit claims.
“Some states have been very efficient, and others have had a hard time,” Mr. Trump said.
Then he suggested that more state aid would be coming.
“Maybe now they’ll be able to buy new equipment,” the president said. “When we get all finished, we’ll have nice, new computerized equipment so they can do it.”
• Gabriella Muñoz contributed to this report.
