Senator Angus King (I-ME) says the new stimulus package should include money for the states. Senator Mitch McConnell (R-KY) apparently disagrees. And because of that, and other differences, any discharge of new money from Washington is stalled, for now.
Unlike the federal government, states—which have been battered to varying degrees by the coronavirus—can’t simply call on the U.S. Treasury for relief, says King, and as such, need immediate help from Washington.
“States can't borrow like the federal government, they can't print money,” King said in an interview with Yahoo Finance. “With these shortfalls, they're going to end up having to lay people off in the midst of the crisis when they really need them.
The New York Times reported that New York for instance faces a potential $10 billion shortfall in tax revenue this year and that “states provide most of America’s public health, education and policing services, and a lot of its highways, mass transit systems and waterworks. Now, sales taxes — the biggest source of revenue for most states — have fallen off a cliff as business activity grinds to a halt and consumers stay home.”
King is concerned that the increasingly dire situation at the state level was being ignored by Republicans. “One of the biggest gaps is that the funds that are supposed to flow to the states are not available for revenue shortfalls caused by the virus” King said. “There's some serious things that need fixing. Why Mitch McConnell didn't approach this through saying, ‘we're going to negotiate and figure out where we go,’ I honestly don't know.”
King is perplexed because he says McConnell needs the Democrats to proceed with a new bill. “The whole thing has been surprising to me in that Mitch McConnell has taken a kind of ‘my-way-or-the-highway approach when he doesn't have the votes.
In an interview earlier this week, King also spoke of the importance of stimulus checks going out this week, now reportedly delayed because President Trump wants his signature on the checks—though the Treasury denied there is any sort of hold up. King also noted that if Trump reopened America too soon and the coronavirus pandemic worsened, the president “owns it.”
But King is just as concerned about the states and their revenue shortfalls. “That's something that really seriously needs to be fixed,” he said.
Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer.
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