Treasury Secretary Steven Mnuchin told CNBC on Thursday that any new government assistance to combat the economic slowdown from the coronavirus pandemic will not be a bailout for states.
"On the state issue, the president is not going to bail out Chicago and New York and other states that prior to the coronavirus were mismanaged," he said on "Squawk Box."
"We're going to have the Kennedy bill which basically says that the states that have the money can use the money for lost revenues. That's going to take care of virtually every single state. I think that's a very fair compromise," he added.
The legislation, sponsored by Sen. John Kennedy, R-La., wouldn't provide any additional funding for states but would give state and local governments greater flexibility over how they use funds from the Coronavirus Aid, Relief and Economic Security Act.
"There's a lot of Republicans who feel like, and I agree with this, that states have their own ability to tax. ... It's unfair for states like Florida to be bailing out states like New York. But having said that, we're going to go with a compromise solution which is the Kennedy bill," Mnuchin added.
New York Gov. Andrew Cuomo, a Democrat, often has been at odds with the Trump administration over the handling of the virus. Florida's Republican governor, Ron DeSantis, has been aggressive in reopening the state despite a persistently high level of cases.
Mnuchin's comments came shortly after Senate Republicans and the Trump administration said they reached a tentative deal on legislation that would serve as a starting point in talks with Democrats. As the number of infections rise, and with the extra $600 per week in unemployment assistance set to expire at the end of next week, Congress is facing mounting pressure to pass an aid package.
Mnuchin said the Republican coronavirus relief plan will extend enhanced unemployment insurance "based on approximately 70% wage replacement," although it was unclear how such a plan would be structured.
As of Wednesday afternoon, the GOP was considering slashing the extra benefit from about $600 to $100 a week through the rest of the year, sources told CNBC's Kayla Tausche. Negotiators had not made any final decisions at that time.
The GOP will need Democrats to sign off on any plan because they control the House and have the ability to block the Republican proposal in the Senate.
Republicans want the package to cost roughly $1 trillion. House Speaker Nancy Pelosi, D-Calif., has called that level of spending insufficient to address the health and economic crisis created by the pandemic.
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