Republicans Are Absolutely Deluded if They Think Only Blue States Need a Bailout

Republicans Are Absolutely Deluded if They Think Only Blue States Need a Bailout

The economic crisis is coming for GOP strongholds, too.

By JORDAN WEISSMANN at Slate

https://slate.com/business/2020/04/red-states-are-going-to-need-a-bailout-too.html

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It’s unclear why, exactly, some Republicans appear convinced that only political entities that happen to be run by Democrats are about to experience a financial rout. Perhaps it’s because the biggest coronavirus hot spots have tended to be in places like New York, New Jersey, and Michigan. But economic activity has frozen all over the country as governors try to slow the pandemic, and even if Georgia or Texas attempt to “reopen” a bit early, that won’t save them from the shockwaves of a deep national recession. Some Republicans, like McConnell, have seemingly suggested that states like Illinois are in financial trouble now because of their long-standing public pension problems. Insofar as that makes any sense, it’s because some states with pension issues (Illinois, Pennsylvania) haven’t been able to build large rainy day funds or other reserves that would help tide them through this crisis. But that list of offenders also includes McConnell’s own home state of Kentucky, which has one of the worst-managed pensions in the country.

And here’s the thing: States that have put money in reserve are going to get bowled over, too. “Even well-prepared states are going to be totally outmatched by the size of the downturns we’re about to see,” Dan White, director of government consulting and fiscal policy research at Moody’s Analytics, told me.

Earlier this month, White and his colleagues published a forecast showing that, due to the coronavirus crisis, the vast majority of states are likely to face serious budget shortfalls over the next year that will more than devour their entire rainy day funds—and that some of the worst emergencies are likely to be in swing states and in deep Trump country. Sure, New York, New Jersey, and Illinois are in trouble. But so are Florida, South Carolina, Oklahoma, Missouri, Indiana, Arizona, Mississippi, West Virginia, and plenty of others, including, yes, Kentucky.

And worst off of all? That would be Louisiana, which as far as I can glean basically doesn’t have an economy anymore. (Take away oil, restaurants, and tourism, and the Big Easy is in big trouble.) It could be facing a budget hole equal to 34 percent of its 2019 revenues. “Without aid from the federal government, they could have to cut 30 or 40 percent of their budget,” White said. “That’s not just furloughing some people or laying people off. That’s changing the way you deliver basic services.”

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