McConnell Plays the Villian Badly

Faced with the obvious — that cities and states will need financial help to bail out of this crisis just as much or more than any other group — speaker McConnell goes public stating that he’ll stand in the way of any federal funds going to help them out. The reason? The deficit, a $25+ Trillion-dollar obligation that he’s just casually added several more trillions to without so much as a blink. Scant days ago, McConnell had no qualms about passing a $2 trillion dollar bill, with $500 billion to bail out large corporations without any oversight or limits… today, McConnell is so worried about the deficit that he’d prefer to see states and cities go bankrupt, particularly because so many of the largest needs are — to quote his press release — “The Blue States”, meaning that their governors are Democrats.

Let’s understand this in context, by using New York (one of those “blue” states) as a prime example.

As the global epicenter of the virus, New York State has experienced more cases — 263,460 — than any other country in the world (Spain with 213,024 is next). This is despite some of the strongest mitigation programs in the country, and a hospital system that is regarded as one of the nation’s finest. Recent studies suggest that the actual number of cases could be far higher, based on broader recent testing… with the unanswered question of what those additional cases might mean to future medical care.

To respond to the ravages of the pandemic, New York shut down one of the most important business cities in the world, and one of the world’s top destinations for travelers, shoppers, and tourists. New York City has a GMP (gross metropolitan product) of about $1.5 trillion, by a wide margin the most productive city in the U.S. As a result, NY State paid $35.6 billion more to the federal government than it received, the highest amount of any state and one of only 7 states with a negative balance. By contrast, McConnell’s own Kentucky ranks third from the bottom, getting 241% more in return than it contributes.

The idea of bankrupting NYS as a result of the demands of the pandemic is beyond reprehensible, it’s stupid and cruel. The penalties incurred by a bankruptcy (were it legal, which it doesn’t appear to be) would be felt directly by the state and city employees — NY State has some 632,000 employees between state and local governments, a total that is primarily made up of teachers, firefighters, police, medical workers, etc Their pensions would be at risk, as would their health insurance, and there would be significant layoffs… pretty much the last thing that the nation needs during a deep recession, and in light of the 26 million already unemployed. Does McConnell really want to disrupt the employment and pensions of these first responders? Their reward for their astonishing heroics is that the federal government would turn their backs on them in the middle of their efforts? For your next act, let’s cut the pensions of our soldiers as they return from a war…

Then let’s consider the cost to the state and city municipal bonds. NY holds an AA+ rating, among the highest in the country, and the primary reason that their borrowing costs are less than 4% of their revenues. A bankruptcy would destroy NY’s credit rating for years, throwing hundreds of billions of dollars of bonds, many of which are in the hands of individuals across the country, into disarray. The losses to those individuals would be in the billions, another painful notch during a collapsing economy. Forced to pay multiples of their current interest rates, NY would find its budget devastated for years, significantly impacting that engine that feeds so much of the country…

… and that’s NY. Across the country, state and local employees constitute 16.2 million employees, including some 8,800,000 teachers, over 1,400,000 medical professionals, over 700,000 police officers, about 350,000 firefighters… well, you get the idea. All of them would immediately enter a period of uncertainty and vulnerability.

The easy thing to assume is that he’s not being serious; he’s putting up a straw man to have something in his pocket for the next round of negotiations with Congress. Give me something that I want, and I’ll go ahead and allow the states to breathe again. That might be his thinking, but it’s not likely to work… more likely, the first question asked of the President at his next news conference would be “Is it really your intention to lay off hundreds of thousands of first responders right now?” Any leverage that the speaker thought he’d gained would be ended just about as quickly as he could answer the next call from the White House.

The stupid political games are one thing — have at them, and enjoy. Just as you play, remember this: first responders, the unquestioned heroes of this generation, are the employees of those states that you want to threaten. A nation that dearly loves and respects their contributions and sacrifices will have something very loud, and very unpleasant, to say if you mess with them.