Sen. Cotton: Dems Would Have Used Fed Lending for 'Backdoor' Bailouts

Democrats wanted to use the Federal Reserve lending programs as a "backdoor bailout" for cities such as New York City or states like Illinois, but Senate Majority Leader Mitch McConnell and Sen. Pat Toomey stopped that from happening through their action with the $900 billion coronavirus relief deal reached Sunday, Sen. Tom Cotton said. 

"The economy did not collapse in March and April, as many people feared," the Arkansas Republican said on Fox News' "Fox and Friends." "We wanted to revoke that authority so Joe Biden and the Democrats can’t use it as a backdoor bailout for cities like New York City or Chicago or states like Illinois by providing ultra low-interest loans to those cities and states."

Toomey, R-Pa., told CNBC's "Squawk Box" Monday that he'd opposed extending the Federal Reserve lending programs because the United States is not in a state of financial emergency that requires such a broad lending program, and because such legislation should be passed by Congress first.

"Pat Toomey was a real champion for not only Senate Republicans but the American taxpayer this weekend,” Cotton said. "The Democrats wanted to use Federal Reserve lending programs as a backdoor bailout for cities and states that have mismanaged their finances for decades."

Congress gave the Federal Reserve "limited and temporary authority to help provide liquidity into the lending markets" in the March CARES Act and that succeeded, said Cotton. 

Meanwhile, Cotton said the bill is "very important" and will give relief to struggling businesses, families, and workers "in no small part because the Democratic governors and mayor keep locking down these businesses."

The legislation could also have been passed four months ago, as it's similar to what Senate Republicans proposed in September "that (House Speaker) Nancy Pelosi refused to even consider," said Cotton. 

"She said she'd rather have nothing than have the bill we proposed in September," said Cotton. "I'm glad we're going to get it across the finish line before Christmas."

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