Michigan Gov. Gretchen Whitmer in an interview Sunday criticized Senate Majority Leader Mitch McConnell’s suggestion that states should be able to declare bankruptcy calling it “incredibly dangerous” and claiming that many state leaders agree with her, Fox News informed.
McConnell proposed this during a radio interview last week with Hugh Hewitt. He was talking about the coronavirus and the financial struggles of many states. Besides the coronavirus outbreak, McConnell said their burden is also due to ballooning pension obligations.
“I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities,” he said. “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.”
Whitmer, who is a Democrat, stated that McConnell is wrong and that governors on the both sides of the aisle are siding with her.
“It’s because of this global pandemic that we are all having to make tough decisions. We need the federal government to have our backs,” she said.
McConnell was referring to the recent bailouts approved by congress. The Washington Post reported that states and localities could be on the next round of funding.
His comments were not the first time allowing states to declare bankruptcy has been discussed. In the wake of the 2008 financial crisis, some advocated allowing hurting states to reorganize in bankruptcy. But Republicans at the time squashed the idea, even as they also panned the possibility of the federal government bailing states out.
Governors have been calling for federal help for over a week. Maryland Republican Gov. Larry Hogan, the chairman of the National Governors Association, issued a statement on April 11 pleading with Congress to appropriate $500 billion for state governments as they deal with the economic and fiscal consequences of the coronavirus pandemic.