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McConnell pushes ‘bankruptcy route’ as local governments struggle

“My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that,” McConnell added. “That’s not something I’m going to be in favor of.”

States do not have the ability to declare bankruptcy under current law, and modifying the bankruptcy code would likely be a heavy lift in Congress.

The Senate on Tuesday passed a nearly $500 billion “interim” package that included additional funding for a popular small-business loan program, hospitals, and expanded coronavirus testing. During the negotiations, Democrats had demanded billions more for state and local governments, citing requests from Democratic and Republican governors alike.

McConnell’s office referred to such funding as “blue state bailouts” in a news release earlier Wednesday, further underscoring that there remains broad GOP opposition to such cash infusions. And McConnell himself said it was no surprise that governors, regardless of political party, “would love to have free money.”

“[W]e’re not ready to just send a blank check down to states and local governments to spend any way they choose to,” McConnell said, adding that “we need to have a full debate not only about if we do state and local, how will they spend it.”

McConnell doubled down on his position in a phone interview with Fox News later in the day, declaring that he would seek to limit any money for states and localities for coronavirus-specific concerns, if Congress does embark on a fourth stimulus package at all.

“We’re not interested in solving their pension problems for them,” he told Fox’s Bill Hemmer. “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 themselves and bad decisions in the past.”

But at least a few Republican senators appear to disagree with McConnell. Sen. Rob Portman of Ohio said Tuesday afternoon that he was working with other senators on a bill for “additional and more flexible” funding for states.

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