State Bailouts: ‘Beyond Galling,’ ‘Shameless,’ Too

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The drama of profligate states using the coronavirus pandemic as an excuse to seek federal bailouts to paper over long-term mismanagement has finally found a Pavarotti — the editorial board of Chicago Tribune. It uncorked this morning an editorial calling pleas for as much as $40 billion in federal lucre for Illinois “shameless,” “dishonest,” “beyond galling.” And it was just getting tuned up.

We share the Tribune’s sentiments, not only in respect of Illinois but New York as well. And not just those two. “Every member of Congress should carefully scrutinize pleas from states whose unbalanced budgets, embarrassing credit ratings and vastly underfunded pension systems predated virus outbreak,” the Tribune reckons. It’s hard to imagine that there are not millions of Americans who share the sentiment.

The grand tenors of the Tribune were ignited by a letter to the Illinois congressional delegation in Washington from the president of the Illinois senate, Don Harmon. The Harmon epistle was so craven that even Governor Pritzker made a point of distancing himself from it. Yet the idea of a federal bailout for Illinois in the midst of this crisis is broadly supported within the Democratic Party in the state, and even by some Republicans.

Our own Ira Stoll, in a column this morning, touches on the Harmon letter. He goes on to note that President Trump and Senator McConnell may be tempted to tell the Democratic states to get lost. Mr. Stoll offers an alternative approach — using the sudden federal financial leverage “to demand policy reforms that would diminish the long-term structural dysfunctionality” of the mendicant states.

What Mr. Stoll marks is the underlying principle — that if governors like J.B. Pritzker of Illinois, Gavin Newsom of California, and our own Andrew Cuomo have an “unlimited, undated, blank check” from Washington, they face less of an incentive to curb their profligacy. Illinois and New York rank 49th and 44th among states who have laid aside funds for a “rainy day,” according to the Tax Foundation.

“When New York and Illinois start asking Washington for a bailout,” Mr. Stoll writes, “what they are really doing is asking taxpayers who live in better-managed states to pay their bills.” Asking small business owners, teachers, nurses, bus drivers, bartenders from other states to help dig Illinois out of its pre-coronavirus, self-inflicted, financial hellhole is, as the Tribune puts it, “astonishingly brazen.”

It will take a brazen president to confront this issue — and not only because, in its own way, America’s government is as fiscally unkempt as even Illinois’s. Nor are we suggesting the federal government has to drive every distressed state into bankruptcy. It would, though, strike us as reasonable for the manager of the federal fisc — and the debts the federal government owes its central bank — to force the worst offenders to do their part before they get new money. It strikes us as a job made to order for Mr. Trump.


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