Senate Majority Leader Mitch McConnell on Wednesday insisted that flailing state and local governments should be able to “use the bankruptcy route” rather than receive aid from the federal government — signaling renewed opposition to a top Democratic demand for the next coronavirus relief package.
In an interview with conservative radio host Hugh Hewitt, the Kentucky Republican also expressed concern about adding billions more to the national debt in addition to the nearly $3 trillion Congress has already sent out the door to combat the economic and public health challenges of the pandemic.
“There’s no good reason for it not to be available,” McConnell said of individual localities declaring bankruptcy in order to stay afloat.
“My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that,” McConnell added. “That’s not something I’m going to be in favor of.”
States do not have the ability to declare bankruptcy under current law, and modifying the bankruptcy code would likely be a heavy lift in Congress.
The Senate on Tuesday passed a nearly $500 billion “interim” package that included additional funding for a popular small-business loan program, hospitals, and expanded coronavirus testing. During the negotiations, Democrats had demanded billions more for state and local governments, citing requests from Democratic and Republican governors alike.
McConnell’s office referred to such funding as “blue state bailouts” in a news release earlier Wednesday, further underscoring that there remains broad GOP opposition to such cash infusions. And McConnell himself said it was no surprise that governors, regardless of political party, “would love to have free money.”
“[W]e’re not ready to just send a blank check down to states and local governments to spend any way they choose to,” McConnell said, adding that “we need to have a full debate not only about if we do state and local, how will they spend it.”
McConnell doubled down on his position in a phone interview with Fox News later in the day, declaring that he would seek to limit any money for states and localities for coronavirus-specific concerns, if Congress does embark on a fourth stimulus package at all.
“We’re not interested in solving their pension problems for them,” he told Fox’s Bill Hemmer. “We’re not interested in rescuing them from bad decisions they’ve made in the past, we’re not going to let them take advantage of this pandemic to solve a lot of problems that they created themselves themselves and bad decisions in the past.”
But at least a few Republican senators appear to disagree with McConnell. Sen. Rob Portman of Ohio said Tuesday afternoon that he was working with other senators on a bill for “additional and more flexible” funding for states.
“The skyrocketing unemployment rate and subsequent decline in tax revenue has left local governments stretched to the limit,” Portman wrote on Twitter.
In an interview Tuesday with POLITICO, McConnell said the Senate will not act on a so-called Phase 4 bill until the chamber is back in session. Senators are currently scheduled to return to Washington on May 4, though McConnell has cautioned that events could dictate a change in that plan.
“We need to see how things are working, see what needs to be corrected, and I do think that the next time we pass a coronavirus rescue bill we need to have everyone here and everyone engaged,” McConnell said.
Several Republican lawmakers have openly fumed in recent days over Congress’ extended recess, lamenting that the House and Senate are negotiating and passing hundreds of billions of new funding without being formally in session. Many of those same lawmakers have expressed repeated concerns about adding to the deficit while the economy remains inoperative, urging state and local officials to consider opening up shop.
Separately, McConnell said the Senate would return to its normal business of confirming federal judges when senators return to Washington.
“My motto for the year is ‘Leave no vacancy behind.’ That hasn’t changed,” McConnell told Hewitt. “The pandemic will not prevent us from achieving that goal.”
Caitlin Oprysko contributed to this report.