Senate Majority Leader Mitch McConnell (R-KY) had harsh words for a handful of states that are looking to use coronavirus relief funds from the CARES Act and from a potential fourth coronavirus relief package to pay outstanding debt they incurred before the disease struck: they should handle their own financial matters even if that means they have to declare bankruptcy.
The pointed comment was aimed at states like Illinois, whose Democratic legislators, in a letter circulated last week and later obtained by The New York Times, raised the possibility of begging the federal government for a bailout in the next coronavirus relief package, forcing national taxpayers to foot the bill for a $41.6 billion bailout package, $10 billion of which would go directly to Illinois’ public sector employee unions — debt incurred decades before coronavirus appeared on the scene.
Illinois is in dire financial straits, and Illinois’ Democratic governor, JB Pritzker, had planned to ask voters to approve a change to the state’s constitution in November that would have allowed for a dramatic hike in the income tax. That’s unlikely to pass now that hundreds of thousands of Illinois residents are unemployed, thanks to an ongoing coronavirus-related pandemic, which the state now believes could extend into June.
Newspapers in Illinois, from both the left and right, were “appalled” at the prospect of taking federal bailout money to handle Illinois’ pension crisis, Forbes reports, but Democrats seem determined to request the funds, regardless.
McConnell said, in an interview with Hugh Hewitt on Wednesday, that he won’t allow Illinois — or California or Connecticut — to make their financial issues the country’s problem, particularly while the national economy remains in lockdown.
“You raised yourself the important issue of what states have done, many of them have done to themselves with their pension programs,” McConnell said. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”
States that need money to cope with coronavirus-related expenses will receive help, McConnell said, agreeing with President Donald Trump, who raised the possibility of handouts to states after meeting with New York Governor Andrew Cuomo. The total for such a bailout, the National Governors Association estimates, could run into the hundreds of billions of dollars just for states, perhaps as high as $500 billion. For cities, it could be an additional $250 billion.
But, McConnell warned, there will be limits to Congress’ generosity.
“I said yesterday we’re going to push the pause button here, because I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” McConnell said.
Speaker of the House Nancy Pelosi (D-CA) has been drafting the fourth coronavirus relief package and McConnell expects it to total somewhere around $1.1 trillion, and give generous assistance to state and local governments.
McConnell also said Thursday that he will press “pause” on any relief package until at least May so that Congress can evaluate the nation’s economic health and whether further spending bills will help in the recovery or whether they will mire the United States in further financial difficulty.
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