In his New York Times column, liberal economist Paul Krugman has been making an excellent point about the shutdowns and stay-at-home orders that governors in the U.S. have been ordering in response to the coronavirus crisis: as difficult as they are, the economic damage will be even worse without social distancing. But Krugman has also stressed that the United States’ federal government needs to do everything it can to financially support businesses, workers, and state governments.
And in his column this week, Krugman lambasts Senate Majority Leader Mitch McConnell for failing to realize that.
“The lockdown needed to contain the coronavirus is causing an economic slump several times as deep as the Great Recession,” Krugman explains. “Yet this necessary slump doesn’t have to be accompanied by severe financial hardship…. Unfortunately, it’s looking increasingly likely that tens of millions of Americans will, in fact, suffer extreme hardship and that there will be devastating cuts in services. Why? The answer mainly boils down to two words: Mitch McConnell.”
Krugman adds that McConnell has made it abundantly clear that he has no desire to help state governments during the coronavirus pandemic — especially if they are “blue states” with Democratic governors.
“On Wednesday, McConnell, the Senate majority leader, declared that he is opposed to any further federal aid to beleaguered state and local governments, and suggested that states declare bankruptcy instead,” Krugman notes. “Lest anyone accuse McConnell of being even slightly nonpartisan, his office distributed two memos referring to proposals for state aid as ‘blue state bailouts.'”
Krugman emphasizes that “state and local governments” that are “on the front line of dealing with the pandemic are facing a combination of collapsing revenue and soaring expenses.”
“The obvious answer is federal aid,” Krugman writes. “But McConnell wants states and cities to declare bankruptcy instead.”
McConnell’s talk of “blue state bailouts” and bankruptcy filings, according to Krugman is “stupid on multiple levels.”
“For one thing,” Krugman asserts, “states don’t even have the legal right to declare bankruptcy; even if they somehow managed all the same to default on their relatively small debts, it would do little to alleviate their financial distress — although it could cause a national financial crisis. Oh, and the idea that this is specifically a blue state problem is ludicrous. Fiscal crises are looming all across America, from Florida to Kansas to Texas — hit especially hard by crashing oil prices — to, yes, McConnell’s home state, Kentucky.”