Should struggling states be allowed to declare bankruptcy or get bailed out?
Rep. Steve Scalise weighs in on Mitch McConnell suggesting states should go bankrupt instead of receiving a federal bailout amid the coronavirus pandemic
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Many states now calling for federal bailouts had financial problems prior to the coronavirus pandemic and have already been "flushed with cash" from the government under the CARES Act and Paycheck Protection Program (PPP), Louisiana Republican Rep. Steve Scalise said Thursday.
In an interview on "America's Newsroom" with host Sandra Smith, Scalise said leaders should keep in mind that the country has already spent billions of dollars to try to restructure a rapidly crumbling economy.
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"But, there was a $150 billion that went to the states in the last bill -- the CARES Act that we just passed a few weeks ago. That $150 billion is just starting to get to states. Each state was given an allocation based on population and then the state and local governments have access to that money to get them through the COVID-19," he explained.
"And so, you know, some governors that were having financial problems before this crisis, keep in mind, are talking about a bailout for themselves," Scalise continued. "Just remember: there is $150 billion that just went out the door. Most of those states got that money in their bank account earlier this week. So, they have that money.
Senate Majority Leader Mitch McConnell, R-Ky., joined by the GOP leadership, speaks to reporters just after meeting with Attorney General William Barr to discuss expiring provisions of the Foreign Intelligence Surveillance Act and other government intelligence laws, on Capitol Hill in Washington, Tuesday, Feb. 25, 2020. (AP Photo/J. Scott Applewhite)
"Before they start talking about a bailout from the federal government from problems they had prior to COVID-19, let's make sure that this money that was spent, that they are just getting now, was spent properly," he cautioned.
Senate Majority Leader Mitch McConnell, R-Ky., came under fire on Wednesday after saying he would "certainly be in favor" of allowing blue states to declare bankruptcy because "it saves some cities."
“We’re not interested in solving their pension problems for them, we’re not interested in rescuing them from bad decisions they’ve made in the past,” he told Fox News host Bill Hemmer on "Bill Hemmer Reports" later on Wednesday. “We’re not going to let them take advantage of this pandemic to solve a lot of problems that they created for themselves, and bad decisions they made in the past.”
New York State Democratic Governor Andrew Cuomo took issue with McConnell's statement, labeling the suggestion “one of the saddest, really dumb comments of all time.”
Cuomo also accused McConnell of hyperpartisanship, criticizing him for distinguishing among states based on their political leanings, rather than “states where people are dying. Why don’t we think about that? Not red and blue. Red, white and blue. They’re just Americans dying.”
March 24, 2020: New York Gov. Andrew Cuomo speaks during a news conference in New York. President Donald Trump declared that states could “call your own shots” in determining how and when to loosen restrictions on businesses and social gatherings. Clusters of states representing the vast majority of Americans have decided cooperation in dealing with the coronavirus is the better option. (AP Photo/John Minchillo, File)
At his Thursday morning coronavirus new briefing, Cuomo continued to hurl words at McConnell, calling his mindset "vicious" and beseeching him to put aside his "petty" partisan political lens, arguing that now is the time for humanity and decency.
A day earlier, at his daily press conference on the pandemic, New Jersey Gov. Phil Murphy assailed McConnell's comments about blue states having bankruptcy as an option.
Murphy said on Wednesday: “Really? This is the time, in a moment of crisis unlike any our country has faced in at least 100 years, to suggest it’s a good thing for states to go bankrupt?
“Come on, man. That is completely and utterly irresponsible,” Murphy said.
However, Scalise urged Smith to keep in mind that hundreds of billions of dollars are going to states in both CARES Act relief and unemployment aid.
"There's money and, of course, we are going to pass more money for small businesses to help save those small businesses. And, by the way, that money is 75 percent of the money we are going to pass today and the PPP...has to be spent on workers -- bringing workers off the unemployment rolls. That also saves the states money," he remarked.
"So, for some of these governors again -- I mean these are states you are talking about, New York -- had real serious financial problems prior to COVID-19. They are getting flushed with cash from the federal government for this crisis. Businesses and workers are getting money as well," Scalise stated further.
"We know there is a shortfall everywhere," he admitted. "The real answer to that, Sandra, is to get our economy back open.
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"We've heard President Trump talk about this: the need to make sure that we're not trading off between [the] safety of our health and safety of our economy. You can and must do both, but you have to start getting people back to work in a safe way over these next few weeks," he insisted.
"I mean, look, we are learning more from our medical experts about how to do that which includes social distancing. But, you are hearing from all the small businesses that say even with the money from the federal government, they can't hang on for another month or two," Scalise concluded.
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