‘I Dare You’ To Let States Go Bankrupt

TOPLINE

New York Governor Andrew Cuomo in a press conference on Friday again sharply criticized Senator Mitch McConnell (R-Ky.) for his suggestion that states facing budget crises due to coronavirus should declare bankruptcy, a day after calling it “one of the really dumb ideas of all time.”

KEY FACTS

Like many others, New York is facing large budget shortfalls due to the pandemic, with Cuomo and other governors repeatedly calling for more federal funding to states.

New York is expecting roughly $13 billion in lost revenue due to coronavirus this year, amounting to a 14% revenue decline, Cuomo said. Between 2021 and 2024, the state projects it will lose another $61 billion as a result of the public health crisis.

“Some people have suggested that states should declare bankruptcy,” Cuomo said, referring to Senate Majority Leader Mitch McConnell’s comments on Thursday. “I think, as I said yesterday, it’s a really dumb idea.”

Putting aside the “absurdity” and questionable morality of the proposal, the New York governor said, states can’t even legally declare bankruptcy unless a federal law is passed allowing them to do so.

“Pass the law, I dare you,” Cuomo told McConnell during his press conference. “Pass that bill, if you weren’t just playing politics.”

“We’ll see how many states actually take you up on it, I know I wouldn’t,” he said.

Crucial quote

“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 said.

Crucial statistics

The “good news,” according to Cuomo, is that New York’s total number of coronavirus hospitalizations continues to decline. “All the evidence suggests we’re on the downside of the curve,” he said on Friday. The net change in intubations and hospitalizations also declined, but the “troubling” statistic is that the number of new infections has basically flat lined recently, at around 1,300. Another 422 New Yorkers died in the past 24 hours, a number that is “dropping somewhat,” Cuomo said.

Key background

In his press conference on Thursday, Cuomo called McConnell the “grim reaper,” saying that his suggestion about letting states go bankrupt was “one of the really dumb ideas of all time.” Cuomo first ridiculed McConnell’s notion after he proposed it on Wednesday: “Okay, let’s have all the states declare bankruptcy—that’s the way to bring the national economy back.” According to the New York Times, the bankruptcy idea is likely to encounter significant pushback in the White House, as well as from Democrats and even some Republicans in Congress.

Further reading

Cuomo Shreds ‘Grim Reaper’ McConnell’s Suggestion That States Go Bankrupt (Forbes)

McConnell Says States Should Consider Bankruptcy, Rebuffing Calls for Aid (New York Times NYT )

Another 4.4 Million Workers File Unemployment Claims As Coronavirus Labor Crisis Deepens (Forbes)

Cuomo: ‘If You Want States To Reopen, We Need Funding’ (Forbes)

Cuomo: Coronavirus Relief Bill ‘Is Not Enough,’ States Need Funding (Forbes)

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