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Trump: Government shouldn't rescue states and cities struggling under pandemic

State and local governments have pressed for the government to rescue them from what is quickly becoming a fiscal catastrophe.
Image: Donald Trump
President Donald Trump speaks about the coronavirus at the White House on Wednesday, April 22, 2020.Alex Brandon / AP

President Donald Trump suggested Monday that the federal government should not be responsible for bailing out states and cities that are struggling financially because of the coronavirus pandemic.

"Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help?" Trump tweeted Monday morning.

"I am open to discussing anything, but just asking?" he added.

State and local governments have pressed for federal aid in recent weeks as the coronavirus pandemic dries up many of their revenue sources, threatening a fiscal catastrophe. State and local governments have said they may need as much as three-quarters of a trillion dollars.

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Trump's comments came just days after Senate Majority Leader Mitch McConnell, R-Ky., said he would prefer states to be able to declare bankruptcy rather than have the federal government provide hundreds of billions of dollars in relief to state and local governments.

New York Gov. Andrew Cuomo, a Democrat, responded to Trump later Monday by pointing out that New York is one of the states that typically gives back to the federal government more than it receives.

"If you want to go to who gets bailed out and who paid what, nobody would be bailing out New York State. New York State has been bailing them out every year for decades," he said. "If you want to do an analysis of who is a giver and who is a taker, we are the No. 1 giver."

Cuomo added: "Who are the taker states? Kentucky. Southeast part of the country."

White House senior adviser Kevin Hassett said last week that states cannot declare bankruptcy unless Congress changes the law, so the federal government is "probably" going to have to assist state and local governments further. McConnell has floated changing the law so states can declare bankruptcy.

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Although Democrats sought to include about $150 billion in funding to state and local governments in the latest coronavirus aid package, the aid did not make it into the final bill. Already, Congress approved has $150 billion in funding for state and local governments as part of earlier coronavirus legislative aid — assistance that governors and local leaders said would ultimately not be enough.

A Congressional Research Service report on initial coronavirus aid last week said that "early evidence suggests that the COVID-19 economic shock will have a notable impact on state and local budgets," pointing to the "sizable share of economic output" that derives from state and local governments.