Federal government should help states, cities and hospitals recover from coronavirus, Gary Cohn says

The federal government should help cities, states and hospitals recover some of the money lost amid the coronavirus pandemic, President Donald Trump’s former economic advisor Gary Cohn said Monday.

“I’m not trying to help cities and states get back to a solvent financial position, [but] I would like to get hospitals and states back to a financial position they were in 60 days ago,” Cohn, a former Goldman Sachs executive, said on CNBC’s “Squawk Box.”

Cohn spoke as the stock market appeared poised for a sharp rebound from last week, with investors’ hopes pinned to positive results from an early stage human trial for a Covid-19 vaccine being developed by U.S. drugmaker Moderna.

But Cohn said that the prospect of a vaccine shouldn’t stop the federal government from providing assistance to parts of the country that have been hobbled by the economic shutdown.

“A vaccine is sort of the holy grail here. That said, there’s been damage done,” Cohn said.

“Think about what our actions have done so far. So far, we’ve put in place actions to support unemployed workers, justifiably. We put in actions to support small and medium-sized businesses and large businesses,” Cohn said. “The part of the equation we have not helped, we have not helped cities and states, and hospitals, which is almost more important.”

Cohn said those groups should be returned to the financial state they were in two months earlier – around the time many regions began to implement harsh social distancing measures to try to slow the spread of the virus.

More than 1.4 million Covid-19 cases and nearly 90,000 deaths have been confirmed in the U.S., according to data from Johns Hopkins University.

State leaders, particularly Gov. Andrew Cuomo of New York, the epicenter of the crisis in the U.S., have for weeks demanded that any additional federal coronavirus legislation should include significant funding for states. But Republicans, including Trump and Senate Majority Leader Mitch McConnell, R-Ky., have shown resistance toward sending money to states.

Trump said earlier this month that giving recovery cash to the states would be unfair to Republicans, “because all the states that need help — they’re run by Democrats in every case.” 

Cohn served as Trump’s National Economic Council director until March 2018. He was succeeded by Larry Kudlow.

“The last point is, we have to get money back to our hospital system. I don’t care if you’re a large major metropolitan hospital, or a small rural hospital,” Cohn told CNBC. “Our hospital system is losing an enormous amount of money.”

House Democrats on Friday passed another round of massive coronavirus relief legislation, which would send nearly $1 trillion to cash-strapped state and local governments, among a bevy of other provisions. Republicans say the bill is dead on arrival in the Senate.

Cohn said that political leaders need to decide whether their goal at this point in the crisis should be to continue flattening the “curve” of coronavirus infection, or to focus on recovery efforts. 

“Those are completely different pieces of legislation,” he said.

“I’m sort of in this camp – if we decide we’re solving for the recovery, a lot of the actions that can be taken to help solve for recovery again can fall on the states and the cities,” Cohn said, “and it may mean getting money to states and cities.”