Mitch McConnell’s rejection of federal aid for states is a recipe for an ‘extended depression’: analysts
Senate Majority Leader Mitch McConnell has been slammed by everyone from New York Times liberal Paul Krugman to Washington Post conservative Jennifer Rubin over his recent assertion that he has no desire to “bail out blue states” and that individual states that are struggling should apply for bankruptcy. Journalist Robert McCartney, in an article for the Post, reports that according to “officials and analysts,” McConnell’s proposal is “a recipe for turning a potentially short recession into a prolonged depression.”
“Governors, mayors and county leaders of both parties are clamoring for help in the next federal rescue package after McConnell and President Trump blocked such assistance in the $484 billion bill approved last week,” McCartney reports. “House Speaker Nancy Pelosi (D) says the next bill must include state and local aid, but Trump has sent mixed signals about whether he will support it. McConnell and many other Senate Republicans are resisting.”
Speaking on condition of anonymity, a source described by McCartney as a “local government budget expert” told the Post, “If you want to send the country into an extended depression, sending state and local governments into bankruptcy is a great way to do it.”
Another official who views McConnell’s approach as a recipe for disaster is Maryland Comptroller Peter Franchot, a Democrat. Franchot told the Post, “It’s a very grim situation we’re facing. There’s a blizzard of blank checks going to big companies and big banks and other entities. We need one more, and we need it quickly.”
Franchot views the economic crisis that coronavirus has inflicted on the U.S. as “worse than the 2008-2009 recession. That was a huge fiscal and monetary catastrophe, but we didn’t see 340,000 Marylanders file for unemployment in three weeks.”
Fairfax County Board Chairman Jeff C. McKay, also a Democrat, told the Post, “We’re not going to get out of this pandemic and this budget mess unless the people on the ground instead of people in Washington, D.C. are given flexibility to use the money as they know how to help the economy recover.”
Amy Liu, director of the Brookings Metropolitan Policy Program, is vehemently critical of McConnell’s suggestion that states should “use the bankruptcy route.” On April 22, Liu tweeted, “This is grossly irresponsible, with a naive sense of what state and local governments do. Without emergency relief as their revenues crater, state and local governments will not be able to run key programs like unemployment insurance, social services, housing assistance and small business outreach needed to protect people and businesses in this crisis.”