Senate Majority Leader Mitch McConnell said Wednesday that states weighed down by pension costs, expensive COVID-19 programs and more — like California, Connecticut and Illinois — should be allowed to declare bankruptcy instead of getting a federal bailout.
“I would certainly be in favor of allowing states to use the bankruptcy route,” he said on the syndicated Hugh Hewitt radio show, which Bloomberg news confirmed. “It’s saved some cities, and there’s no good reason for it not to be available.”
“There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations,” McConnell said.
States cannot declare bankruptcy under current law, as Federal Reserve watcher Danielle DiMartino Booth pointed out on Twitter: “While I don’t dispute the spirit of his statement, at last check, state bankruptcy is un-Constitutional.”
House Speaker Nancy Pelosi said a “major package” of support for state and local governments will be included in the next stimulus legislation to be reviewed by Congress, according to an interview on Bloomberg Television Wednesday.