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Senate Majority Leader Mitch McConnell defends his opposition to more fiscal relief for state and local governments by arguing that it would just “bail out” states that have mismanaged their finances. That’s far off base.
In reality, states would use the money to avoid massive layoffs and deep spending cuts due to the public health emergency and its economic effects. If they impose these cuts, the recession will be considerably deeper and longer.
With state budget shortfalls in the fiscal year 2021 are projected to far exceed those in the worst year of the Great Recession, the next COVID-19 federal aid package needs to include fiscal relief to state and local governments.
President Trump himself acknowledged this need earlier this week.
Senator McConnell suggested that, rather than helping states, the federal government should allow them to go bankrupt. That wouldn’t help either state budgets or the national economy and could actually make things worse.
The bottom line: Strong fiscal relief for states is one of the most important and badly needed steps federal policymakers can take now.
Senator McConnell’s misunderstandings and misrepresentations on this matter do nothing to alter that reality.
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