Governors on Sunday criticized Senate Majority Leader Mitch McConnell, R-Ky., for saying this week he would prefer states to be able to declare bankruptcy rather than provide hundreds of billions in relief as state and local government revenue dries up.
McConnell’s comments came as state and local governments pressed for funding in the latest coronavirus aid package — funding that ultimately was not included. However, President Donald Trump has indicated that emergency funding for state and local governments would be on the table for the next round of COVID-19 legislation.
McConnell said any debate over state and local funding would not take place until the Senate is back in session, likely at the start of next month, and said it’s time to start considering the impact all the emergency spending will have on the national debt. Speaking to conservative radio host Hugh Hewitt on Wednesday, McConnell said he “would certainly be in favor of allowing states to use the bankruptcy route.”
“It saves some cities,” he continued. “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.”
On Sunday, Michigan Gov. Gretchen Whitmer, a Democrat, called McConnell’s suggestion “outrageous” and “incredibly dangerous.” She doesn’t “think that the vast majority of governors in this country, Republican and Democratic, would agree with him.”
“He’s wrong and we need Congress to step up and help states,” she told ABC’s “This Week.” “Because this pandemic — it’s because of this global pandemic that we are all having to make tough decisions. We need the federal government to have our backs.”
Also on “This Week,” Maryland Gov. Larry Hogan, a Republican and co-chair of the National Governors Association, said he thought McConnell “probably would regret making that comment the other day.”
“We have a commitment from the president and the vice president and there’s bipartisan legislation in the Senate to do something to help support the states,” Hogan said, adding of McConnell’s comment, “I think it just slipped out, but I’m hopeful that we will be able to convince Senator McConnell to go along with the bipartisan bill in the Senate and the administration’s commitment to help the states in that final stimulus package.”
On NBC’s “Meet the Press,” New Jersey Gov. Phil Murphy, a Democrat, said the idea states should be able to declare bankruptcy was “irresponsible and not factual,” adding it would “gut the living daylights” out of education and first responder jobs.
State and local governments are facing dire financial straits as a result of the pandemic and across the country, they are clamoring for the federal government to rescue them from what could quickly become a fiscal catastrophe.
Bipartisan leadership of the National Governors Association called for $500 billion in aid to state governments to account for budget shortfalls, while counties and mayors have called for an additional $250 billion in emergency relief. On Monday, Sens. Bill Cassidy, R-La., and Bob Menendez, D-N.J., unveiled a legislative proposal for $500 billion in state and local funding.
While McConnell has floated changing the law so states can declare bankruptcy, other Republicans have indicated they believe more relief funding is needed.
NBC News reached out to all 22 GOP governors from states Trump won in 2016 to see what they thought of McConnell’s remarks. Only Missouri Gov. Mike Parson’s office replied, pointing to remarks he made earlier in the week disagreeing with the comments about bankruptcy but saying the states “should be responsible” for how they manage their finances and shouldn’t be getting bailed out.
Democrats sought to include $150 billion in funding for state and local governments in the package passed last week, though it was not ultimately included. Congress had already passed $150 billion in funding for state and local governments in an earlier package — assistance state and local leaders said ultimately would not be enough to cover budget shortfalls exacerbated by the crisis that could lead to massive job and service cuts.
Speaking with CNN’s “State of the Union,” House Speaker Nancy Pelosi, D-Calif., was asked if it was a tactical mistake to not include such funding in the bill that passed days ago.
“Just calm down,” she said. “We will have state and local, and we will have it in a very significant way. It’s no use going on to what might have been.”
“The governors are impatient,” she added. “I’m a big fan of [New York] Governor [Andrew] Cuomo. My own governor, Gavin Newsom, has been spectacular, my mayor, Mayor [London] Breed. The state and local have done their jobs magnificently. They should be impatient. Their impatience will help us get an even bigger number … And that goes for Republican governors too. Governor Hogan of Maryland has been spectacular in all of this. So, it’s many governors, many mayors, bipartisan, for us to get the largest amount.”
White House senior adviser Kevin Hassett told “This Week” that states can’t declare bankruptcy unless Congress changes the law and that the federal government is “probably” going to have to assist state and local governments further.
“I know President Trump is open to negotiating in a bipartisan way as he has been in the previous bills to … hear from Democrats, see what they want and then, you know, present them with his own ideas,” Hassett, formerly Trump’s top economic adviser, said. “But, you know, I think the state going bankrupt is something that’s not really been anticipated by the Founders. And so I’m not sure exactly … I didn’t see the clip from Senator McConnell but I’m not sure exactly what he was talking about.”
On “Fox News Sunday,” Treasury Secretary Steven Mnuchin said such funding is “something that should be debated.”