"The last thing we need in the middle of an economic crisis is to have states filing bankruptcy all across America"

“Senate Majority Leader Mitch McConnell (R-Ky.) is facing blow back from across the political spectrum after he suggested states should be able to declare bankruptcy as they face severe budget holes sparked by the coronavirus outbreak. 

“The debate over providing more federal funding for state and local governments is emerging as an early lightning rod in the next coronavirus bill, with Democrats and some Republicans asking for hundreds of billions in additional assistance. 

“But McConnell sparked his own political firestorm when, in response to a question from radio host Hugh Hewitt, he said he supported letting states declare bankruptcy and positioned Republicans as cautious of providing them with additional federal relief. 

“‘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.

“The remarks were met with quick and fierce backlash by lawmakers and local officials from states hit hard by the spread of the coronavirus, including members of McConnell’s own party. Maryland GOP Gov. Larry Hogan predicted on Thursday that McConnell would ultimately regret his comments — if he didn’t already. 

“‘Mitch McConnell, I think, probably regrets saying that,’ Hogan said during a Politico Playbook event. ‘If he doesn't regret it yet, I think he will regret it. The last thing we need in the middle of an economic crisis is to have states filing bankruptcy all across America and not able to provide services to people who desperately need them,’ he added. ‘I'm hopeful that we're going to be able to … convince Sen. McConnell that maybe he shouldn't let all the states go bankrupt.’

“Rep. Pete King (R-N.Y.), who is retiring, called McConnell the ‘Marie Antoinette of the Senate.’ ‘McConnell’s dismissive remark that States devastated by Coronavirus should go bankrupt rather than get the federal assistance they need and deserve is shameful and indefensible,’ added King, whose home state has been hard hit by the coronavirus. 

“State officials warn that without additional federal assistance they face deep budget holes as businesses have scaled back or closed altogether, depriving them of a tax base. At the same time many are increasing their spending on health care and to help those financially affected by the pandemic. Forty-three states have issued stay-at-home orders, while three additional states have partial orders. 

“Unlike the federal government, which has borrowed trillions to help fund its coronavirus relief efforts, every state but Vermont has a requirement to maintain a balanced budget. Current law doesn’t allow states to declare bankruptcy. 

“‘This is one of the really dumb ideas of all time,’ New York Gov. Andrew Cuomo (D) said during his press briefing Thursday. ‘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.

“Illinois Gov. J.B. Pritzker (D) said ‘there are an awful lot’ of senators that disagree with McConnell; Michigan Gov. Gretchen Whitmer (D), who is viewed as a potential vice presidential contender, called it ‘incredibly irresponsible,’ and Louisiana Gov. John Bel Edwards (D) called it ‘grossly irresponsible.’

“The National Governors Association, led by Hogan and Cuomo, is asking Congress to approve an additional $500 billion ‘in direct federal aid that allows for replacement of lost revenue’” (The Hill).