Calls that states hit hard by the coronavirus pandemic should seek bankruptcy rather than federal assistance are irresponsible and an abandonment of cherished national principles.
Senate Majority Leader Mitch McConnell said last week that he would be unwilling to back any new federal disaster relief bills that would send help to states like Massachusetts, New York and California that face plummeting tax returns and skyrocketing public service and unemployment bills.
Deriding such assistance as a “blank check” and “free money” during an interview with conservative radio host Hugh Hewitt, the Associated Press reports, McConnell said he sees “no good reason” why laws shouldn’t be changed to allow states to file for bankruptcy, instead.
At a moment of great national need, one of the country’s most powerful politicians is rejecting sound economics that says the federal government should right now ignore any concerns about future inflation and spend whatever is necessary to get all parts of America back on its feet. So long as interest rates on Treasury bonds are this low, the risk to America’s future finances is vanishingly small.
As Banker & Tradesman went to press, Gov. Charlie Baker was petitioning the federal Department of Labor for a $1.2 billion loan to cover unemployment claims in May and June, alone.
It is clear the scale of the coronavirus crisis is so vast that attempts to keep the country afloat will consume huge chunks of state budgets that ordinarily go towards paying public health workers, bus drivers and other critical public servants whose functions are in no way luxuries. Yet states do not control their money supply and cannot effectively deficit-spend during crisis. Instead, when their rainy day funds run out they must look for help from the federal government, which can.
By floating his peculiar idea that states should seek bankruptcy protection instead of federal help, McConnell irresponsibly, cruelly rejecting the one tool available to keep this building recession from getting worse and to pay for the medical care hundreds of thousands of coronavirus patients need.
But he is also perniciously rejecting the idea that the United States is one nation, indivisible. His comments give cover to those who would split us into “real Americans” in solidly Republican regions and “fake Americans” in coastal, more liberal states like this one. Perhaps he forgets how residents of “fake America” have subsidized “real America” for decades with their federal tax dollars?
We Americans have a duty to help one another and, in this crisis, to use our immense resources to prevent as much misery as possible. We can’t let a few cruel, small-minded men like McConnell get in our way.
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