“Mitch McConnell to teachers and first responders: Drop dead.” That, of course, wasn’t the headline. But it could have been. The press reported that McConnell, the Senate Republican majority leader, opposed emergency assistance to states and localities—which his office dubbed “blue state bailouts”—suggesting he’d empower states to file for bankruptcy instead. Governors from both parties decried what McConnell had said; New York Governor Andrew Cuomo scorned it as “just dumb.” McConnell, however, is dumb like a snake. Savaging public services in states and localities across the nation serves both his partisan purpose and his ideological interest, and he’s playing for bigger stakes: McConnell is intent on ensuring that this crisis doesn’t go to waste.
States and local governments provide the public services we rely on–police, firefighters, public schools, public parks, mass transit, roads and bridges, water systems, and more—while employing about 13 percent of the nation’s workforce.
Virtually all are required to balance their budget each year. And with the pandemic shutting down the economy, they—red and blue states alike—are up against the wall, facing soaring costs while revenues—sales, gas, and income taxes, oil revenue, and tourist fees—collapse.
Congress included $150 billion in aid to states in the March relief package, but the Treasury Department ruled it could cover only expenses directly due to the pandemic and could be shared only with large cities and counties.
The most recent estimates, offered by both the Center for Budget and Policy Priorities and the Economic Policy Institute, project a shortfall for the states alone of about $500 billion from now through June 2021, with localities losing an additional $250 billion. Even those numbers are based on projections of unemployment levels that increasingly look far too optimistic. With more than 30 million already filing for unemployment, we are nearing the record for joblessness set in the Great Depression. James Knightley, chief economist of ING, notes that by the end of May, fewer than one in two working-age Americans will be drawing a paycheck. If McConnell were to block aid to the states and localities, wholesale layoffs of teachers, police, public hospital staff, and caregivers for the poor and vulnerable would add hundreds of thousands to the number of unemployed.
The cuts have already begun. Los Angeles will force city workers to take 26 days of unpaid leave—the equivalent of a 10 percent pay cut—over the course of the next fiscal year. The city of Dayton, Ohio, furloughed more than a quarter of its workforce, while the state’s Republican governor proposed a 20 percent across-the-board budget cut for next year. New York City eliminated summer jobs for 75,000 young people. Pennsylvania stopped paying nearly 9,000 state employees—more than 10 percent of its workforce.
In 2008, after McConnell’s Senate Republicans blocked a second round of stimulus, states and localities started laying off workers in that summer and continued for the next five years, with 220,000 teachers and 56,000 police officers among those losing jobs. Teacher shortages remain to this day.
For McConnell, cuts in public employees is a benefit, not a bug. And bankruptcy authority would allow conservative governors to rip up their union contracts and break the promises made to retirees in their pension plans. Having eviscerated unions in the private sector, Republicans have been on the hunt after public-sector union workers. Now they have them in their sights.
As Chris Tobe, a former Kentucky pension official and the author of the book Kentucky Fried Pensions, put it, “[McConnell] knows that most of these workers are never going to vote for him.… And he knows that this crisis gives him a chance to achieve the state bankruptcy plan that has been a dream of Republicans for years. They’ve been waiting for the right time to bring this out.”
McConnell and Trump rejected Democratic demands that aid to states and localities be included in the last rescue legislation. Democratic leaders folded, promising it would be included in the next package. McConnell now has made it clear he isn’t on board, and Trump now echoes McConnell’s “blue state” jibes.
In fact, neither Trump nor McConnell can afford to block state aid and trigger massive layoffs before the fall elections. Their extreme position is just a marker for the coming negotiations with House Speaker Nancy Pelosi and the House Democratic majority.
In response, Pelosi has called for $1 trillion in aid for states and localities, clearly raising the figure in anticipation of the negotiations to come. Last Monday, McConnell admitted in a radio interview that “there probably will be” some aid for the states and local governments, but added that “we need to make sure that we achieve something that will go beyond simply sending out money,” suggesting that the next bill must include liability protection for businesses, waiving any liability for harm to workers or customers if owners are negligent in opening up their facilities. He’ll also push to enable governors to declare bankruptcy. Trump adds demands to end sanctuary cities.
By McConnell’s calculation, he’ll let Democrats win some aid to the states and localities, although less than they want or the states need. In exchange, McConnell will pocket liability protections for business and bankruptcy powers for governors—giving both public- and private-sector workers the shaft in one bill.
Assuming that Pelosi finally figures out how to get the House back in operation, the House should pass a bill that treats aid to states and localities as a bipartisan imperative. The legislation should include other vital reforms—universal sick leave, money for vote-by-mail in the fall, plus aid to ensure that the United States Postal Service survives, and payroll protection so small-business owners don’t have to fire their team and workers can keep getting paid even while idled by the shutdowns. They should anticipate Trump’s turn to investment in infrastructure by putting forth a bold Green New Deal investment and jobs program. Then open negotiations with McConnell on what is included in addition to aid to states and localities.
A crisis of this severity necessarily involves a struggle about what comes next. Mass unemployment, for example, exposed the folly of our slapdash, employer-based private health insurance system. If the federal government simply guaranteed all health care costs in the crisis, with the providers billing the federal government directly, it would demonstrate that Medicare for All is common sense. Instead, Democratic leaders endorsed a complicated plan to help the unemployed pay to extend their private insurance, if they have it.
McConnell and his corporate patrons are clear about the stakes—and they are on the march. Big corporations and banks are cashing in on the financial collapse, pocketing trillions from the Federal Reserve, and even plundering money appropriated for small businesses. Trump’s aides have used the crisis to gut environmental protections. Trump is looking to cripple the postal service. And McConnell is intent on using the negotiations to further weaken public services and public employees, while larding benefits on the interests that back him.
The battle over aid to states and localities is but one skirmish in the struggle to determine our direction as we come out of the crisis. And right now, we are headed backward down the wrong path—and will be so long as McConnell sets the terms of the debate.