President Donald Trump suggested Monday that the federal government should not be responsible for bailing out states and cities that are struggling financially due to the coronavirus pandemic.
“Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat-run and managed, when most of the other states are not looking for bailout help?” Trump tweeted Monday morning.
State and local governments have in recent weeks pressed for federal aid as the coronavirus pandemic dries up many of their revenue sources, threatening a fiscal catastrophe. State and local governments have said they may need as much as three-quarters of a trillion dollars.
Trump’s comments came just days after Senate Majority Leader Mitch McConnell, R-Ky., said he would prefer states to be able to declare bankruptcy rather than have the federal government provide hundreds of billions in relief to state and local governments.
White House senior adviser Kevin Hassett said last week that states cannot declare bankruptcy unless Congress changes the law so the federal government is "probably" going to have to assist state and local governments further. McConnell has floated changing the law so states can declare bankruptcy.
Though Democrats sought to include roughly $150 billion in funding to state and local governments in the latest coronavirus aid package, it did not make it into the final bill. Already, Congress approved $150 billion in funding for state and local governments as part of earlier coronavirus legislative aid — assistance governors and local leaders said would ultimately not be enough.
A Congressional Research Service report last week on initial coronavirus aid said that "early evidence suggests that the COVID-19 economic shock will have a notable impact on state and local budgets," pointing to the "sizable share of economic output" that derives from state and local governments.