States have spent billions as stay-at-home orders have led to unemployment, curtailed spending and lowered tax revenue.
United States President Donald Trump on Monday slammed US cities and states seeking billions of dollars in more federal aid to offset huge losses amid the coronavirus outbreak as legislators spar over the next round of potential economic relief along sharp party lines.
Democrats are calling for more aid to help beleaguered municipalities left out of recent stimulus measures. But some Republicans have baulked at the price tag, while the Senate’s top Republican said he would back state bankruptcy before giving them more US funding.
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“Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help? I am open to discussing anything, but just asking?” Trump, a Republican, tweeted.
Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help? I am open to discussing anything, but just asking?
Mayors and governors have spent billions in recent weeks as US coronavirus cases topped 960,000 and led to more than 54,700 COVID-19-related deaths as of this weekend. Social distancing and stay-at-home orders implemented across most of the nation to curb the spread of the highly contagious virus have also triggered a surge in unemployment, curtailed consumer spending and depressed local tax revenue.
Congress previously allocated $150bn for governments, but governors have asked for another $500bn while cities and counties are seeking $250bn, saying the money is needed to cover the costs of responding to the outbreak as well as revenue lost while residents shelter in place.
Democrats had sought to include another $150bn in funding for state and local governments in an aid package passed earlier this month, but the funds did not make it into the final version of the bill.
Trump, who is seeking re-election in November, appeared to back Senate Majority Leader Mitch McConnell, who last week told a conservative talk-radio host that he “would certainly be in favour” of letting states enter bankruptcy. White House senior adviser Kevin Hassett said last week that before states could declare bankruptcy, Congress would need to make changes to the law.
Despite McConnell’s comments, other Republicans, including Maryland Governor Larry Hogan, who chairs the National Governors Association (NGA), and some Republican senators, have backed funding for state and local governments.
Democratic governors, including NGA Vice Chairman and New York Governor Andrew Cuomo, have blasted McConnell’s idea, saying their states have an outsized role in filling the nation’s coffers and allowing bankruptcy would upend financial markets.
“If you want to go to who gets bailed out and who paid what, nobody would be bailing out New York State. New York State has been bailing them out every year for decades,” he said. “If you want to do an analysis of who is a giver and who is a taker, we are the number one giver.”
Cuomo added, “Who are the taker states? Kentucky. Southeast part of the country.”
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