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Illustration: Aïda Amer/Axios

House Democrats on Tuesday released a $3 trillion phase 4 coronavirus relief proposal that would provide $500 billion to state governments and $375 to local governments — welcome news to local leaders who've been pushing hard for funds as city coffers run dry.

Where it stands: The fate of the package is uncertain, as it hasn't been negotiated with House Republicans and the Trump administration.

  • The White House is in "wait and see mode," said White House economic adviser Kevin Hassett during a Brookings Institution briefing this week. He argued that some of the biggest expenditures in the House's Heroes Act could be "putting the cart before the horse," per Axios' Dion Rabouin.
  • Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) are still working on legislation to create a $500 billion fund to help state and city budgets.
  • Some Republicans support aid, but they want to ensure the money actually reaches local governments and is spent on COVID-specific shortfalls rather than to address budget problems that existed before the pandemic.
  • For example, Rep. Tom Reed (R-N.Y.) said this week he’s working on such provisions with Menendez and Cassidy to avoid “budget shenanigans.”

The big picture: Emergency federal aid provided by Congress so far is for expenses directly related to coronavirus response. As of now, funds aren't yet allocated to replace lost revenue, which is what city leaders say they need to avoid large-scale layoffs and cuts to services.

  • The current $150 billion set aside for states and cities is only available for jurisdictions of 500,000 or more residents.
  • The Center on Budget and Policy Priorities increased its forecast of U.S. state budget shortfalls from $500 billion to $650 billion.
  • This month, Moody's lowered its U.S. state sector outlook to "negative" (down from "stable"). The last time Moody's gave the sector a "negative" outlook was in early 2008 due to the financial crisis.
  • 84% of voters favor a $1 trillion federal aid package to states, cities and towns, per a new Hart Research Associates poll on behalf of the American Federation of State, County and Municipal Employees and American Federation of Teachers.

What to watch: Senior living (60%), mass transit (45%) and higher education (43%) are the municipal sectors at highest risk for credit deterioration as a result of the coronavirus, per an April survey of municipal bond analysts by Hilltop Securities.

  • A third of credit analysts think $600 billion of additional relief is needed to have a neutral impact on state and local government credit, per the survey.

Go deeper

GOP Sen. Bill Cassidy tests positive for coronavirus

Sen. Bill Cassidy. Photo: Toni L. Sandys-Pool/Getty Images

Sen. Bill Cassidy (R-La.) said Thursday that he tested positive for the coronavirus, and is "strictly following the direction of our medical experts" by quarantining, local ABC affiliate WBRZ reports.

The big picture: Cassidy is the second senator to test positive, following Rand Paul (R-Ky.) in March. Cassidy said after being notified Wednesday night that he was exposed to someone with the virus, he was tested and plans to notify all those he came in contact with since.

Scoop: Biden weighs retired general Lloyd Austin for Pentagon chief

Lloyd Austin testifying before Congress in 2015. Photo: Chip Somodevilla/Getty Images

Joe Biden is considering retired four-star general Lloyd Austin as his nominee for Defense secretary, adding him to a shortlist that includes Jeh Johnson, Tammy Duckworth and Michele Flournoy, two sources with direct knowledge of the decision-making tell Axios.

Why it matters: A nominee for Pentagon chief was noticeably absent when the president-elect rolled out his national security team Tuesday. Flournoy had been widely seen as the likely pick, but Axios is told other factors — race, experience, Biden's comfort level — have come into play.

Updated 25 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: WHO: AstraZeneca vaccine must be evaluated on "more than a press release."
  2. Politics: Supreme Court backs religious groups on New York COVID restrictions.
  3. World: Thailand, Philippines sign deal with AstraZeneca for vaccine.
  4. Economy: Safety nets to disappear in December Black Friday shopping across the U.S., in photosAmazon hires 1,400 workers a day throughout pandemic.
  5. Education: National standardized tests delayed until 2022.