Biden says clawing back pandemic aid is on the table

A claw back of federal stimulus funds inched closer to reality Tuesday when President Joe Biden signaled he is open to the proposal.

“We don’t need it all,” Biden told reporters Tuesday after a closely watched meeting with Congressional leaders to try to reach a deal to lift the nation’s debt limit.

“But the question is, what obligations were there made, commitments made, money not disbursed, etc.? I have to look, take a hard look at it. It’s on the table.”

The president’s comments come as Congressional leaders try to break a partisan impasse that puts the country on the path toward its first default.

House Speaker Kevin McCarthy’s debt limit bill would rescind roughly $70 billion of pandemic-era stimulus funds.

Bloomberg News

Treasury has said the U.S. will run out of money as soon as June 1.

House Republicans on April 26 passed a debt-ceiling and spending bill that would rescind up to $70 billion in unobligated pandemic aid. The GOP has yet to detail which stimulus aid would be targeted or how it would define “obligated,” which issuer advocates say will prove key to assessing which funds are vulnerable.

The Congressional Budget Office said most reductions in the GOP legislation would come “from the Public Health and Social Service Emergency Fund and from certain infrastructure, rental assistance, community development, and disaster relief programs.”

The National League of Cities said the U.S. Department of Transportation would see $6 billion rescinded, “with cuts to stabilization programs used by local governments and states to keep airports open, buses operating, and trains running.”

Tuesday’s hour-long meeting among top leaders seemed to yield little, with House Speaker Kevin McCarthy, R-Calif., saying afterward that he saw “no new movement.”

“I would hope that [Biden] would be willing to negotiate for the next two weeks so we can actually solve this problem and not take America to the brink,” McCarthy told reporters.

The leaders agreed to meet again Friday and aides will meet daily to try to advance negotiations.

In March 2022, a move to rescind $8 billion in unspent COVID funds from the states stalled the fiscal 2022 spending bill. House Democrats, led by then-Speaker Nancy Pelosi, agreed to Republican demands for the clawback, but later dropped the proposal amid pushback from Democratic governors.

Congress passed six pandemic relief bills in 2020 and 2021 that provided $4.6 trillion in relief and recovery funding.

As of Jan. 31, 2023, the federal government had obligated a total of $4.5 trillion and spent $4.2 trillion, according to the Government Accountability Office. Of the $350 billion Coronavirus State and Local Fiscal Recovery Funds program, the main pandemic program for state and local governments, roughly $349.9 billion has been obligated and $349.7 billion spent, according to the GAO.

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