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Could Filing for Bankruptcy Help New York State?

CECILY MAURAN, HOST: Last night New York’s governor, Andrew Cuomo, rejected Senate majority leader Mitch McConnell’s suggestion that states struggling financially due to coronavirus should consider filing for bankruptcy. Ciara Long looks at the long history of funding battles between the federal government and states.


CIARA LONG, BYLINE: The ongoing pandemic has driven public spending in New York state up — on hospitals, school meals, unemployment costs. But revenues, from sales and income tax, are way down — about 14 percent. 


This is a national emergency, says Richard Briffault, a professor at Columbia Law School. So it makes sense that the federal government should help plug that hole.


RIHCARD BRIFFAULT: Just like the federal government will help when there's an earthquake, it helps when there's floods and hurricanes, this is the same thing. 


LONG: But some in Congress are resisting the idea of bailing states out. And David Schleicher, a constitutional law expert and Yale professor, says that other states also might not want to either.


SCHLEICHER:  If you recall the musical Hamilton, the Jefferson-Hamilton debate, the Jefferson character says, why should we pay for New York.


MUSIC: If New York's in debt why should Virginia bear it? Uh, our debts are paid, I'm afraid.


LONG: The thing is... right now, there actually isn’t a way for states to legally declare bankruptcy. For that to happen, Congress would have to pass a law, which it briefly considered during the 2008 financial crisis but never seriously took up. Ciara Long, Columbia Radio News.



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