Senate Majority Leader Mitch McConnell’s suggestion that states financially strapped by the pandemic should declare bankruptcy rather than receive federal aid would further devastate the national economy, destabilize the municipal bond markets and unfairly damage the retirements of government workers.
McConnell, R-Kentucky, says the federal government should not bail out governments of blue states like California because of the past fiscal mistakes they have made, most notably their poorly run public employee retirement promises.
“We’re not interested in solving their pension problems for them,” he told Fox News. “We’re not interested in rescuing them from bad decisions they’ve made in the past, we’re not going to let them take advantage of this pandemic to solve a lot of problems that they created themselves and bad decisions in the past.”
On the surface, it’s a politically appealing argument to McConnell’s conservative base because state and local governments across the country have promised retirement benefits to government workers but failed to properly fund them.
California is one of the worst. The shortfall in its state and local government pensions works out to about $27,500 for every resident. The Golden State needs to clean up its pension mess.