Maybe Mitch McConnell Was Referring to His Moral Bankruptcy
‘Moscow Mitch’ McConnell’s mouthful about wanting states to go bankrupt sparks outrage, gets walked back big time.
Senate Majority Leader Mitch McConnell (R-KY) sure raised an ruckus when he suggested April 23 on a right wing radio show: “I would certainly be in favor of allowing states to use the bankruptcy route.”
More revealing was his comment later that day on Fox News: “We’re not interested in solving their [blue states] pension problems for them.” More on that soon.
The push back was robust and immediate. New York Governor Andrew Cuomo called McConnell’s remarks “dumb,” “petty” and irresponsible.”
“That’s how you’re going to bring the economy back? By states declaring bankruptcy?” Cuomo asked. “If there was ever a time for humanity and decency, now is the time.”
By Wednesday, April 29, McConnell, sensing a bipartisan rebellion, walked back his entire assertion, telling Fox News, “There’s no question all governors, regardless of party, would like to have more money. I’m open to discussing that.”
Let’s break down why Mitch walked it back. McConnell represents a red state that happens to have a Democrat as governor. Senator McConnell is also running for reelection, and this time will face a formidable opponent in retired Air Force fighter pilot Lt.Col. Amy McGrath. The race is a dead heat, with the candidates virtually tied within the margin of error.
Why is the race so close? A Real Clear Politics tracking poll, which tallies the average of four prominent pollsters, reveals McConnell’s numbers are underwater…on average, 27% approval, 46.5% disapproval. Financially, Amy McGrath has kept up with the second most powerful Republican in the US. During the first three months of 2020, McGrath hauled in $12.8 million compared to McConnell’s $7.5 million.
Expect to watch ads like this one (30 seconds), with McGrath inserted as plaintiff, published by Channel 9, WSYR in Syracuse, NY, via YouTube:
Meanwhile, candidate McGrath unveiled a statewide ad buy accusing McConnell of bailing out large corporation and wealthy investors while refusing to consider additional aid for Kentucky.
Kentucky Governor Andy Beshear added his voice to the din, telling CNN that he “strongly disagrees” with McConnell’s proposal. “Bankruptcy for a state would be disastrous,” he said.
State Bankruptcy is a Republican Priority
When Republicans advocate bankruptcy for fiscally-challenged states, their nod-and-wink is blue states. The reality is that the most productive and wealthiest states least reliant on federal largess are overwhelmingly blue. Of the 15 states most reliant on the federal dole, 11 have Republican governors.
So why would our well-heeled blue states be targets for bankruptcy? Two words: pension funds. Many states are facing the fiscal abyss over the unfunded liabilities of their retirement programs. For example, Illinois’ unfunded liability is closing in on $140 billion. California’s state and local liabilities amount to $1.5 trillion.
(By the way, the commonwealth of Kentucky had more than $26 billion in unfunded liabilities in mid-2019, according to Kentucky Retirement Systems.)
Prominent conservatives believe that breaking pensions is the ticket to breaking government employee unions, a key Democratic constituency. It works this way: A blue state overwhelmed with debt declares, say, a Chapter 9 bankruptcy. Under the Constitution, a bankruptcy is shepherded in federal court by a federal judge. The federal overseers may seek any combination of remedies to relieve the debt burden, such as cancelling collective bargaining agreements and/or laying off workers. The specter of privatization would make a lot of Trump’s crony capitalists even more rich.
Burning question: Why would mostly blue states be in this dilemma? And why are Republicans hot on their trail? The Philadelphia Inquirer‘s Will Bunch has a good take on this:
The survival of public employee unions and pensions is an embarrassment to the conservative movement by showing voters an alternative universe where…middle class workers are rewarded for their toil–instead of all of the benefits flowing to CEOs and shareholders.Will Bunch
Update: Yesterday, April 30, House Speaker Nancy Pelosi announced that state and local governments are seeking up to $1 trillion for coronavirus costs. “This is something of the highest priority,” said Pelosi. “It honors our heroes.”