Yahoo reports U.S. Senate Majority Leader Mitch McConnell on Wednesday opened the door to allowing U.S. states to file for bankruptcy to deal with economic losses stemming from the coronavirus outbreak that are punching big holes in their budgets.
McConnell said in a radio interview that Republicans would not support giving state and local governments more money in future coronavirus aid legislation, saying those funds could end up being used to bail out state pensions.
Speaking on Hugh Hewitt’s syndicated conservative talk radio show, McConnell said he instead “would certainly be in favor of allowing states to use the bankruptcy route.”
Democratic governors slammed the idea.
“Almost hoping for bankruptcy of American states amid the biggest healthcare crisis this country has faced is utterly irresponsible,” New Jersey Governor Phil Murphy said at a press conference.
A spokeswoman for Illinois Governor J.B. Pritzker said “every state is facing budget shortfalls and we need partners in Congress who will work with us on real solutions, instead of using this crisis to propose an ideological Hail Mary.”
Per TheHill, New York Gov. Andrew Cuomo (D) slammed Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday for saying he supports allowing states to declare bankruptcy amid the coronavirus pandemic.
“This is one of the really dumb ideas of all time,” Cuomo said during his daily press briefing.
“Not to fund state and local governments is incredibly short-sighted. They want to fund small businesses, fund the airlines, I understand that, but state and local governments fund police and fire and teachers and schools. How do you not fund police and fire and teachers and schools in the midst of this crisis?” Cuomo added.
He said if the federal government doesn’t fund the states, the states can’t fund the vital services.
Additional funding for state and local governments has turned into a point of contention as lawmakers negotiate federal coronavirus relief. The National Governors Association sent a letter to McConnell and other congressional leaders Tuesday asking Congress to approve $500 billion “in direct federal aid that allows for replacement of lost revenue.”
A $484 billion bill passed by the Senate on Tuesday and expected to clear the House Thursday did not include any new funding for state and local governments despite Democrats’ initial demands. Congress provided $150 billion for state and local governments as part of last month’s $2.2 trillion coronavirus bill and it is expected to be a key issue when lawmakers turn toward a fourth stimulus bill.
“It makes no sense that the entire nation is dependent on what the governors do to reopen … but then you’re not going to fund the state government. You think I’m going to do it alone? How do you think this is going to work?” Cuomo said.
He also said that allowing states to declare bankruptcy would be devastating to the national economy.
“You want to see that market fall through the cellar — let New York state declare bankruptcy,” Cuomo said.