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New York Gov. Andrew Cuomo went full-bore Dirty Harry on Sen. Mitch McConnell on Friday.
“ ‘Go ahead. I dare you.’ ”
Cuomo was asked by a reporter at his daily briefing on the coronavirus pandemic to respond to McConnell’s comment that states, battered by steep declines in revenue during the crisis, should declare bankruptcy instead of seeking federal bailouts. Cuomo pointed out that states are not permitted to file for bankruptcy protection from creditors.
Financially distressed municipalities have recourse to Chapter 9 of the bankruptcy code to protect them from creditors while they reorganize, much as companies can do under Chapter 11. But Chapter 9 does not apply to states, which are also not allowed to run budget deficits, as the federal government can and does.
Barron’s on MarketWatch:It’s not just blue states that face mounting debt woes
“To the senator that proposed it, I say pass a law allowing states to declare bankruptcy. I dare you. And let the president sign that bill,” said Cuomo. “You want to send a signal to the markets that this nation is in real trouble? You want to send an international message that the economy is in turmoil? Do that.”
Cuomo also dismissed McConell’s description of state aid as a “blue-state bailout.”
He noted that New York is the biggest net donor to federal coffers in the form of taxes sent to the federal government each year as compared with the amount the state gets back via federal spending. McConnell’s home state of Kentucky is the third biggest taker from that same pot, Cuomo said.
From the MarketWatch archives (June 2019):States that voted for Trump depend the most on ‘big government’
Also:Here’s how bad state budget shortfalls could get, as aid battle set to ramp up
New York is the epicenter of the U.S. outbreak with more than 280,000 confirmed cases and more than 19,000 fatalities. The U.S. now has 872,122 cases of the virus and more than 50,000 fatalities, according to data aggregated by Johns Hopkins University.
Cuomo has repeatedly called on the federal government for funds to finance the testing needed to safely reopen the economy once the curve depicting new infections has flattened. The state also needs aid to offset the massive deficit that has opened up during the crisis as revenues have been decimated while workers stay at home and observe restrictions on movement and transportation.
Cuomo said the state will produce a finance report next week that is expected to show a $13.3 billion shortfall compared with its budgeted outlook.
The governor went to the White House on Tuesday to meet with Trump and make his case. Trump later said he supported adding relief for states to the fourth legislative response to the crisis.
