Categories –
Item URL – Read More
Item Image –
Item Description – As social distancing forces businesses to shut down, more people find themselves out of a job and unable to earn income.Before the COVID-19 pandemic hit hard, an average of 200,000 to 215,000 people would file for  in a week. The worst ever week in the past 50 years came in 1982, when America saw 695,000 initial claims.In April, the numbers skyrocketed to 20 to 30 times higher than the average. Nearly 1 out of 10 people in the country who previously had a job are now unemployed.  with the Navy Federal Credit Union believes that the situation is even more dire than the numbers indicate.“There are people who are contract workers. There are people who actually cannot file for unemployment because states are so backed up.” Then there are those who won’t qualify for benefits, like parents who have to stay home with children, new college graduates who cannot find work, and people who are considered high risk for coronavirus and must remain in quarantine.McConnell Pushes for Bankruptcy Over Financial AidAs more U.S. citizens cry out for financial relief, U.S. Senate Majority Leader Mitch McConnell announced that filing for bankruptcy could be an option for U.S. states who are suffering economic losses.During a radio interview with conservative host Hugh Hewitt, McConnell stated that Republicans would not support giving money to state and local governments in the future as part of coronavirus aid legislation.“I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,”  said. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”He went on to say that he would be in favor of permitting states to “use the bankruptcy route.” His comments were not well received on the opposite side of the aisle.“Almost hoping for bankruptcy of American states amid the biggest healthcare crisis this country has faced is utterly irresponsible,” New Jersey Governor  responded during a press conference.New York Governor  agreed, referring to McConnell’s suggestion of bankruptcy as “one of the saddest, really dumb comments of all time.”Cuomo also accused McConnell of distinguishing states by political leaning rather than where people are dying. “Why don’t we think about that? Not red and blue. Red, white and blue. They’re just Americans dying.”Some Republicans also disagree with McConnell’s recommendation. New York Representative Peter King called his remarks “shameful and indefensible.” “To say that it is free money to provide funds for cops, firefighters, and healthcare workers makes McConnell the Marie Antoinette of the Senate,” King posted on .A spokesperson for Illinois Governor J.B. Pritzker responded by saying that “every state is facing budget shortfalls and we need partners in Congress who will work with us on real solutions, instead of using this crisis to propose an ideological Hail Mary.”As of right now, states are not able to file for bankruptcy. Local governments and cities can use Chapter 9 municipal bankruptcy to restructure debt if their state permits it. This occurred in Puerto Rico in 2017, when municipal bankruptcy was authorized by the U.S. Congress.The IShares National Muni Bond Exchange ETF, which tracks investments in municipal bonds, traded lower after McConnell’s comments. However, the $3.8 trillion U.S. municipal market showed no change.Some experts viewed McConnell’s bankruptcy idea as nothing more than political posturing. Municipal Market Analytics partner Matt Fabian shared doubt about whether the concept was viable or even constitutional.“The whole point is a red herring,” Fabian explained. “[McConnell’s] statement is more about how Republicans are going to require concessions from Democrats if Democrats want states to get additional aid.”Hugh McGuirk with the investment firm T. Rowe Price Group emphasized that, no matter what, bankruptcy should be a last resort.“I think, bankruptcy or not, that ultimately investors want a stable governmental entity providing the necessary services for its citizens.”The Relief Bill Moves ForwardA  coronavirus relief package was presented on April 22nd and was overwhelmingly approved in the U.S. House of Representatives. The measure passed by a vote of 388-5.Funds are expected to go toward supporting small businesses, and hospitals during the crisis. This new funding will put the total pandemic spending response close to an unprecedented $3 trillion.Threats of opposition were issued after the Republican-led Senate passed the legislation by voice vote days before. The House also approved a committee to investigate the response to coronavirus. The committee will have subpoena power as it probes how funds are spent, the country’s preparedness, and Trump’s administration.While McConnell and his supporters believe that there should be no additional aid, others like Democrat Alexandria Ocasio-Cortez think that what was approved isn’t enough.While this may seem like a success for those seeking aid, it also spells trouble in the future. The next step will be more difficult as the two political parties poise themselves for a fight over additional funding that Republicans cut from the original bill.