McConnell Suggests Bankruptcy, Not Aid, for States

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McConnell Suggests Bankruptcy, Not Aid, for States

With some states facing budget problems, congressional Democrats are seeking billions of dollars in aid as part of the next coronavirus legislation. Senate Majority Leader Mitch McConnell (R-KY) has another suggestion for states in budget trouble: bankruptcy.

 

Officials in some states say they are facing dire budget situations due to the coronavirus. They argue that the economic slowdown will reduce tax revenue and lead to an increased demand for government services. These officials say that they will be forced to fire public safety employees and stop vital government programs unless Congress provides them with money.

 

Sen. McConnell, however, contends that many states have a long history of irresponsible spending. He has said that he does not want coronavirus aid bills to rescue states from what he calls bad decisions of the past. He specifically points to generous pension programs that some states provide without putting away enough money to cover these obligations.

 

Congressional Democrats wanted the latest bill related to the coronavirus to contain billions of dollars in aid for state and local governments. Sen. McConnell prevented this from being included in the package. Instead, he says it may be a good idea for states to explore bankruptcy to restructure their long-term spending.

 

Should the federal government provide aid to states and local governments that are struggling with budget issues? Or should these governments look at declaring bankruptcy to restructure their spending?

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