White House chief of staff Mark Meadows told CNBC on Tuesday that aid to state and local governments poses the biggest obstacle to a pandemic relief deal, even as "real progress" was being made between Democrats and Republicans.
Democrats have pushed for nearly $1 trillion in aid to municipalities hit by revenue shortfalls as a result of the coronavirus crisis, but Meadows told "Squawk on the Street" that figure was not "based on reality."
Meadows said the GOP would support only $150 billion in new funding to state and local governments. That figure, on top of a previously allocated $150 billion, would rectify what he said was an approximately $275 billion loss in revenues sustained during the recession.
"As we look at the number of things that we actually agree to, and the amounts of money allocated to those areas, probably the biggest stumbling block that remains is the amount of money that would go to state and local help," Meadows said.
Talks between the White House and Democratic congressional leaders broke down last month after the two sides failed to agree on the terms of a fifth package designed to contain the economic fallout caused by the Covid-19 pandemic.
Meadows and Treasury Secretary Steven Mnuchin have represented President Donald Trump in the negotiations with Democrats, who are being led by House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y.
While some aspects of a potential rescue bill, such as direct payments to Americans and more money for small businesses, have bipartisan support, the White House is opposed to spending as much as the Democrats have asked for on items such as unemployment assistance and funding for state and local governments.
Amid the election year impasse, the GOP has floated passing a "skinny" bill including only the areas on which the two sides agree, but Democrats have rejected the idea. Meadows said he expected a "targeted proposal" from Senate Republicans to be put forward some time next week.
"Democrats have compromised in these negotiations," Pelosi spokesman Drew Hammill said last week. "We offered to come down $1 trillion if the White House would come up $1 trillion. We welcome the White House back to the negotiating table but they must meet us halfway."