Is A Bailout Coming For Strained State Economies?

The pandemic has ravaged state and city budgets across the country, and revenues are sharply down at a time when public services are needed more than ever. Should the federal government help shore up state budgets?

Kimberly Atkins, WBUR senior news correspondent. (@KimberlyEAtkins)

Michael Leachman, senior director of state fiscal research at the Center on Budget and Policy Priorities. (@leachma2)

Center on Budget and Policy Priorities: "States Need Significantly More Fiscal Relief to Slow the Emerging Deep Recession" by Michael Leachman, Elizabeth McNichol and Joshuah Marshall

"States Need Significantly More Fiscal Relief to Slow the Emerging Deep Recession," by Michael Leachman, Elizabeth McNichol and Joshuah Marshall. © 2020

Politico: "McConnell pushes 'bankruptcy route' as local governments struggle" — "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."

The Hill: "Hogan pans McConnell support for states to declare bankruptcy: 'I think he will regret it'" — "Maryland Gov. Larry Hogan (R) criticized Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday for suggesting that states can declare bankruptcy amid the coronavirus pandemic as governors push for federal funding for state and local governments."

Financial Times: "Coronavirus threatens $500bn hole in US state budgets" — "The economic impact of shutting down local economies threatens to blow a $500bn hole in state tax revenues and force savage cuts to spending on education and other public services unless the federal government steps in with bailout funds."

Vox: "The case for a massive federal aid package for states and cities" — "The most immediate economic cost of the the coronavirus pandemic is obvious: At least 22 million Americans are newly unemployed, putting them and the people in their households at financial risk. But the downturn is having a secondary effect that could make the recession even worse. It’s forcing states and local governments to cut spending and raise taxes just at the moment when that would do the most damage."

ABC News: "Wash. governor calls Mitch McConnell's suggestion states file for bankruptcy 'nuts'" — "Washington Gov. Jay Inslee hopes Senate Majority Leader Mitch McConnell will retract a statement in which he said that states should consider filing for bankruptcy rather than asking the federal government for fiscal relief."