McConnell pushes ‘bankruptcy route’ as local governments struggle

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Senate Majority Leader Mitch McConnell on Wednesday insisted that flailing state and local governments should be able to “use the bankruptcy route” rather than receive aid from the federal government — signaling renewed opposition to a top Democratic demand for the next coronavirus relief package.

In an interview with conservative radio host Hugh Hewitt, the Kentucky Republican also expressed concern about adding billions more to the national debt in addition to the nearly $3 trillion Congress has already sent out the door to combat the economic and public health challenges of the pandemic.

“There’s no good reason for it not to be available,” McConnell said of individual localities declaring bankruptcy in order to stay afloat.

“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.

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