The Senate majority leader is prioritizing the Republican Party rather than the American people during this crisis.
American states are abruptly facing their worst fiscal crisis since the Great Depression. The Center on Budget and Policy Priorities estimates that more than 25 percent of state revenues have evaporated because of the pandemic. Demands on state health-care budgets, state unemployment systems, and state social-welfare benefits are surging. By the summer of 2022, the state budget gap could total half a trillion dollars.
States need help. Senate Majority Leader Mitch McConnell does not want to provide it. On The Hugh Hewitt Show on April 23, McConnell proposed another idea. Instead of more federal aid, states should cut their spending by declaring bankruptcy:
I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities. And there’s no good reason for it not to be available. 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. That’s not something I’m going to be in favor of.”
McConnell expanded on the state-bankruptcy concept later that same day in a phone interview with Fox News’s Bill Hemmer:
We’re not interested in solving their pension problems for them. 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 [with] bad decisions in the past.
McConnell’s words instantly attracted attention, criticism, even some derision. New York Governor Andrew Cuomo blasted the idea as “dumb,” “irresponsible,” and “petty”:
How do you think this is going to work? And then to suggest we’re concerned about the economy, states should declare bankruptcy. That’s how you’re going to bring this national economy back? By states declaring bankruptcy? You want to see that market fall through the cellar? … I mean, if there’s ever a time for humanity and decency, now is the time.
Cuomo’s fervent rebuttal grabbed the cameras. It did not settle the issue. State bankruptcy is not some passing fancy. Republicans have been advancing the idea for more than a decade. Back in 2011, Jeb Bush and Newt Gingrich published a jointly bylined op-ed advocating state bankruptcy as a solution for the state of California. The Tea Party Congress elected in 2010 explored the idea of state bankruptcy in House hearings and Senate debates. Newt Gingrich promoted it in his run for the 2012 Republican presidential nomination.
To understand why Republicans want state bankruptcy, it’s necessary to understand what bankruptcy is—and what it is not.
A bankruptcy is not a default. States have defaulted on their debts before; that is not new. Arkansas defaulted in the depression year of 1933. Eight states defaulted on canal and railway debt within a single year, 1841. The Fourteenth Amendment required former Confederate states to repudiate their Civil War debts
A default is a sovereign act. A defaulting sovereign can decide for itself which—if any—debts to pay in full, which to repay in part, which debts to not pay at all.
Bankruptcy, by contrast, is a legal process in which a judge decides which debts will be paid, in what order, and in what amount. Under the Constitution, bankruptcy is a power entirely reserved to the federal government. An American bankruptcy is overseen in federal court, by a federal judge, according to federal law. That’s why federal law can allow U.S. cities to go bankrupt, as many have done over the years. That’s why the financial restructuring of Puerto Rico can be overseen by a federal control board. Cities and territories are not sovereigns. Under the U.S. Constitution, U.S. states are.
Understand that, and you begin to understand the appeal of state bankruptcy to Republican legislators in the post-2010 era.
Since 2010, American fiscal federalism has been defined by three overwhelming facts.
First, the country’s wealthiest and most productive states are overwhelmingly blue.Of the 15 states least reliant on federal transfers, 11 are led by Democratic governors. Of the 15 states most reliant on federal transfers, 11 have Republican governors.
Second, Congress is dominated by Republicans. Republicans controlled the House for eight of the last 10 years; the Senate for six. Because of the Republican hold on the Senate, the federal judiciary has likewise shifted in conservative and Republican directions.
A state bankruptcy process would thus enable a Republican Party based in the poorer states to use its federal ascendancy to impose its priorities upon the budgets of the richer states.
When Cuomo protested McConnell’s bankruptcy idea, the New York governor raised the risk of chaos in financial markets. But McConnell does not advocate state bankruptcy in order to subject state bondholders to hardship. Obviously not! When McConnell spoke to Hewitt about fiscally troubled states, he did not address their bond debt. He addressed their pension debt. State bankruptcy is a project to shift hardship onto pensioners while protecting bondholders—and, even more than bondholders, taxpayers.
Republican plans for state bankruptcy sedulously protect state taxpayers. The Bush-Gingrich op-ed of 2011 was explicit on this point. A federal law of state bankruptcy “must explicitly forbid any federal judge from mandating a tax hike,” they wrote. You might wonder: Why? If a Republican Senate majority leader from Kentucky is willing to squeeze Illinois state pensioners, why would he care about shielding Illinois state taxpayers? The answer is found in the third of the three facts of American fiscal federalism.
United States senators from smaller, poorer red states do not only represent their states. Often, they do not even primarily represent their states. They represent, more often, the richest people in bigger, richer blue States who find it more economical to invest in less expensive small-state races. The biggest contributor to Mitch McConnell’s 2020 campaign and leadership committee is a
PAC headquartered in Englewood, New Jersey. The second is a
conduit for funds from real-estate investors. The third is the
tobacco company Altria. The fourth is the
parcel delivery service UPS. The fifth is the
Eli Lilly pharmaceutical corporation. The sixth is
the home health-care company, LHC Group. The seventh is the
Blackstone hedge fund. And so on and on.
A federal bankruptcy process for state finances could thus enable wealthy individuals and interest groups in rich states to leverage their clout in the anti-majoritarian federal system to reverse political defeats in the more majoritarian political systems of big, rich states like California, New York, and Illinois.
No question, many states face serious problems with their unfunded liabilities to state retirees. Illinois’s liability nears $140 billion, and its municipalities are liable for additional billions. California’s state and local unfunded liabilities amount to $1.5 trillion.
Those liabilities are often described as “pension” liabilities, but they are driven above all by faster-than-expected increases in retiree health-care costs. They need to be addressed, and addressing them will be a tough policy challenge. It will be a tough legal challenge, too, since those liabilities are often—as in Illinois—inscribed into the state’s constitution.
Difficult and important as these problems are, they are not urgent problems. They existed 24 months ago; they will remain 24 months from now. From a strictly economic point of view, McConnell’s schemes for state bankruptcy are utterly irrelevant to the present crisis. Reducing future pension liabilities will not replenish lost revenues or reduce suddenly crushing social-welfare burdens.
But McConnell seems to be following the rule “Never let a good crisis go to waste.” He’s realistic enough to recognize that the pandemic probably means the end not only of the Trump presidency, but of his own majority leadership. He’s got until January to refashion the federal government in ways that will constrain his successors. That’s what the state-bankruptcy plan is all about.
Houston Police Chief Art Acevedo is tired of the NRA and its corrupt politicians. Cenk Uygur and Ana Kasparian, hosts of The Young Turks, break it down. Tell us what you think in the comments below.
“A Texas police officer who was killed while responding to a domestic violence call may have been struck by a bullet that penetrated his ballistic vest, authorities said Monday. Houston Police Chief Art Acevedo made the disclosure about Sgt. Christopher Brewster’s killing Saturday in a note to officers, just hours after he denounced Republican Senators who he said have not reauthorized the Violence Against Women Act. Acevedo also berated pro-gun advocates who oppose new provisions in the law.”
WASHINGTON — One of the most totemic pictures of the Obama era was a White House photo showing the president bowing to let a 5-year-old black boy touch his hair.
As Jackie Calmes reported in The Times, the boy, the son of a departing National Security Council staffer, had shyly told Barack Obama, “I want to know if my hair is just like yours.”
“Touch it, dude!” the president instructed the child.
It was a moment that summed up all the giddy dreams about race and modernity and a gleaming American future that propelled a freshman senator with an exotic name into office.
Now, one of the most totemic pictures of the Trump era has been tweeted by Melania from the El Paso hospital visited by the first couple amid the blood-dimmed tide of back-to-back gun massacres in Texas and Dayton.
The first lady is holding 2-month-old Paul Anchondo, whose parents, Jordan and Andre, died shielding him from a shooterwho confessed to the police that he drove from his home in Allen, Tex., to El Paso to kill Mexicans with an AK-47-style rifle. A manifesto he posted on 8chan, an online forum that’s a haven for white nationalists, stated that he wanted to stop the “Hispanic invasion of Texas.”
President Trump, standing next to Melania and the baby in the picture, is grinning and giving a thumbs-up.
The infant’s uncle, Tito Anchondo, told reporters that he brought Paul to the hospital to meet Trump, while other victims refused to do so, because he wanted to tell the president about the pain of the family. His slain brother, he said, was a Trump supporter. He told The Washington Post that he felt consoled by Trump.
President Barack Obama in 2009 bent over so the son of a departing staff member could feel his hair.CreditPete Souza/The White House
But still, there is something sickening about the photo. The picture of Obama with a child was luminous with hope and idealism. The one of Trump with a child was dark with pain and shattered ideals.
Devoid of empathy and humanity, Trump is mugging with an infant who will never know his parents. They were shot by a psychopath whose views echoed Trump’s dangerous and vile rants painting people with darker skin — like the baby’s father — as the enemy, an infestation and invasion aiming to take something away from real Americans. It is the same slimy chum thrown out by other Republicans, only more brutally direct and not limited to campaign season.
Even as we absorbed the grotesque image from the hospital, we had to watch the heart-rending footage of Hispanic children sobbing and stranded in Mississippi because their parents, many working at a chicken processing plant, had been rounded up by ICE.
The Post featured a disturbing headline on Monday about a new study: “Risk of Premature Birth Increased for Latinas After Trump’s Election.” The story said, “Researchers have begun to identify correlations between Trump’s election and worsening cardiovascular health, sleep problems, anxiety and stress, especially among Latinos in the United States.”
The shining city on a hill is an ugly pile of rubble.
Even on this most tragic of weeks for so many families, Trump was obsessing on himself, on his crowd size compared with Beto, and on whether he was getting enough obeisance from Ohio pols.
It defies one’s faith in the good sense and decency of America that we cannot stop the deluge of shooting rampages — even at a time of unprecedented weakness for the N.R.A. and the loathsome Wayne LaPierre, with the gun lobby awash in coup attempts and corruption.
Gun control has the aspect of an intractable problem when it is anything but. Inexplicably and abhorrently, we have decided to live with periodic human sacrifices. That became clear in 2012 in Newtown after the slaughter of the “beautiful babies,” as Joe Biden called the dead first graders. If that didn’t shock the soul enough to act, what could?
We’ve heard Trump talk about talking sense into N.R.A. officials three times now, during the 2016 campaign and after the Parkland shooting and again Friday after his sympathy calls in Dayton and El Paso. The first two times, he caved to the N.R.A. quickly.
Yet temperamentally, Nixon-to-China, Trump is suited to that job. Even though he’s a belligerent, he’s not so enamored of war and guns. “My sons love hunting,” he once tweeted. “I don’t.” He’s no gun nut; he’s a former Democrat from New York who likes to golf.
If he wanted to lead a crusade to get real background checks — or even a ban on assault weapons, which he said in a 2000 book that he favored — he would be formidable.
There is some movement now because the Republicans are scared — not of the shooters but of suburban voters.
For the most part, Republicans are gun owners and Democrats aren’t. But Republican voters are more supportive of common-sense gun control than elected members, who are wallowing with the swamp creatures at the N.R.A.
Mitch McConnell, Dr. No, won’t want to do anything; his spokesman was backing away on Friday. That same day, the No. 3 Republican in the Senate, John Barrasso, pumped the brakes on possible inroads, background checks and red-flag laws.
If the president and Republicans come up with anything at all, it will be a remedy just marginal enough to give themselves cover, denying Democrats a powerful campaign issue.
Moscow Mitch and Dreadful Donald will keep talking compromise and hope that things settle down by September, when Congress gets back.
But point-blank: Our Republican leaders are cowards.
We shouldn’t let things die down. Because people keep dying.
