(AmericanProsperity.com) – On Wednesday afternoon, Sen. Majority Leader Mitch McConnell (R-KY) said it’s time to hit “the pause button” on bailing out state governments and giving them free money. The COVID-19 pandemic is hitting state budgets hard, but that’s not their only problem. They also have massive pension obligations that have become unaffordable as well. Some states were already facing billion-dollar deficits before the pandemic hit.
(Bloomberg) — Senate Majority Leader Mitch McConnell said Wednesday he favors allowing states struggling with high public employee pension costs amid the burdens of the pandemic response to declare bankruptcy rather than giving them a federal bailout.
— Carl Quintanilla (@carlquintanilla) April 22, 2020
Governors are imploring the federal government for more money. In the phase 3.5 stimulus bill passed in the Senate yesterday, Democrats wanted money for state and local governments. Republicans were able to keep the money out of the bill. Instead of giving them free money, McConnell said he’d be in favor of changing the law to allow states to file bankruptcy.
McConnell said bankruptcy would not be a state’s first choice. Instead, they’d prefer to borrow money from future generations, so they don’t have to face the consequences. However, that’s something McConnell said he would not be in favor of moving forward.
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