April 24, 2020

ITEP: Making Decisions on Federal Relief Based on Blue v. Red States is Morally Bankrupt 

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Following is a statement by Meg Wiehe, deputy executive director of the Institute on Taxation and Economic Policy, regarding Senate Majority Leader Mitch McConnell’s press release on “blue state bailouts” and suggestion that states facing budgetary shortfalls should seek bankruptcy protection.

“Although COVID-19, for now, has taken a greater toll on coastal states, the infectious virus will not limit its economic impact based on party affiliation. Picking winners and losers and targeting federal relief responses based on politics reveals the underlying rot at the core of some policymaking.

“Sen. McConnell suggested that states facing budget shortfalls should simply file bankruptcy, though he offered no such suggestion to corporations asking for federal help. No state or region will be exempt from this unprecedented economic calamity. All states face substantial revenue hits, and all states have new budget needs specific to the COVID-19 crisis. In fact, it is likely that red states will face the toughest blow since they rely too heavily on consumption taxes that are being hit particularly hard right now, and many either don’t have income taxes or have cut them so severely that they are a limited revenue-raising tool. We should be having a conversation about the best policy solutions for the entire nation, not basing policy responses on which states are politically expendable based on their demographics or voting patterns.

“People comprise states, and our tax dollars support local, state and federal governments. The federal government should step up to help states. Besides providing vital services such as education, infrastructure and public health, states also employ public servants. Budget cuts will reduce critical services and cut jobs at a time when we need them most. Getting the nation through this unprecedented health and economic crisis calls for bold action and leadership from the highest levels of government. Elected officials who pick winners and losers are defying democracy, being derelict in their duty to serve all their constituents and revealing a warped vision of what economic recovery should look like and for whom government should work.”