Posted on 04/22/2020 10:40:58 AM PDT by abb
Senate Majority Leader Mitch McConnell (R-Ky.) on Tuesday said that he supports letting states declare bankruptcy as they face mounting budget constraints sparked by the coronavirus and as Democrats pledge to seek more federal funding.
McConnell, during an interview with radio host Hugh Hewitt, said any additional federal assistance to state and local governments needed to be "thoroughly evaluated."
"I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities. And there’s no good reason for it not to be available. My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that. That’s not something I’m going to be in favor of," McConnell said.
Congress provided $150 billion as a part of last month's $2.2 trillion coronavirus bill for state and local governments, who are forecasting massive holes in their budgets due to the economic impact of the coronavirus.
But a $484 billion bill passed by the Senate on Tuesday, and expected to clear the House on Thursday, did not include any new funding for state and local governments. Democrats have said it is a top priority for a "phase four" coronavirus bill and both Treasury Secretary Steven Mnuchin and President Trump have appeared open to including new funding in whatever Congress passes next.
But McConnell, during the Tuesday interview, appeared wary, saying that there needed to be a "broad discussion" within the Senate Republican conference, where lawmakers warned that including state and local funding in the "interim" bill likely would have prevented it from clearing by unanimous consent.
"You raised yourself the important issue of what states have done, many of them have done to themselves with their pension programs. There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations," McConnell said, after Hewitt floated Illinois, California and Connecticut as examples of states that have overly generous benefits for public employees.
"We’ll certainly insist that anything we’d borrow to send down to the states is not spent on solving problems that they created for themselves over the years with their pension program," McConnell added.
Current law prohibits states from declaring bankruptcy. But governors have warned they are facing deep economic fallout from the coronavirus, with most states under a stay-at-home order and businesses scaled back or closed altogether.
The National Governors Association sent a letter to McConnell and other congressional leaders on Tuesday saying Congress needed to approve an additional $500 billion for states "in direct federal aid that allows for replacement of lost revenue."
"These continuing losses will force states and territories not only to make drastic cuts to the programs we depend on to provide economic security, educational opportunities, and public safety, but the national economic recovery will be dramatically hampered," wrote Maryland Gov. Larry Hogan (R), the chairman of the organization, and New York Gov. Andrew Cuomo (D), the vice chairman.
I’m not so sure here.
States like California and Illinois can declare bankruptcy and ESAD for all I care.
But the problem is how Fedzilla will bail them out.
I do not want my tax dollars going to Newsome or any other idiot liberal goobernor.
How about if these states go to phase 1 tomorrow instead.
Yeah, but mathematically we knew that pension collapse was coming in the sixties. It’s not exactly a surprise.
Oh come on! Blue states were already in the whole. NY IL, CA at the least. Corona virus is now an excuse for years of mismanagement? The first states to shut down. Cooincidence?
Hewitt was being polite in not mentioning KY, which in percentage (of fully funded) terms is one of the worst.
I’m sure that’s all part of the negotiation. Now the “public servants” have skin in the game, so the pressure to end the lockdowns will greatly increase.
“Goodbye gold-plated government pensions.”
Yep. One way or the other.
L
Creative thinking red states will thrive. Blue states will suffer and die
well, there are at least 2 reasons why states cannot declare bankruptcy
1. it would violate the US Constitution’s Contracts Clause (article 1, section 10, clause 1) (states cannot abrogate their obligations), and
2. the bankruptcy statute provides that “municipalities” may declare bankruptcy.. and it defines that term as “subdivisions of a state”....so it is quite clear that the law does NOT authorize “states” to declare bk
also, I personally think letting states declare bankruptcy would be a terrible thing to do... it would strongly incentivize states towards even more fiscal irresponsibility than some states already exhibit.
The comments at The Hill website indicate there are not many Trump fans there.
We’ve been saying that for years, but save a couple of examples, like Detroit, those pension plans keep pumping out the dollars.
IIRC, Detroit’s bankruptcy gave only some of the pensioners haircuts.
Mitch’s fiscal conservatism stops when it comes to foreign policy. He’s a big supporter of our endless wars in the Middle East, which have cost $8 trillion according to trump
When trump was trying to withdraw from Syria last year, Mitch supported a senate resolution that condemned trumps action
I loathe Mitch
But but but judges , you say. Not good enough reason to give swampster Mitch a pass. Remember, Romney also votes for trumps judges.
Some of these states, and yes, businesses too; need to fail. The government handouts need to stop.
And then, there was that time when the bill came due for all the lefty states and their fiscal criminality. That time where they couldn’t pay the bill.
But then they’ll raise taxes on everything to make up for it.
Look closer at Fort Worth.
Does this include those they own money to seizing assets? Some business owner stiffed, some dude owed money gets to claim a few acres of state park land? Or in Colorado one of those 106mm recoilless rifles or a 105 howitzer they use on snowpacks?
Nice to see I’m not the only one that’s thought of this.
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