Editorial: Congress can't afford to bail out Michigan
Michigan’s budget is in a world of hurt, following a three-month lockdown in response to the coronavirus. As a result, the state’s leaders are turning to the federal government to solve their problems. But Congress has already added a dangerous amount of debt to combat the virus.
Most states are feeling the blow to their bottom line. Yet the federal government cannot magically wave a wand and make that money appear — as our country racks up record levels of borrowing, we are all going to have to pay for it.
Just in the last few weeks, Michigan politicians and interest groups have called on Congress to help boost infrastructure and K-12 funding, as well as send more aid in response to flooding in Midland.
The state faces more than a $6 billion shortfall through next year.
Rather than tackle that deficit head on, however, Michigan officials are demanding federal assistance.
"The bottom line is if we’re going to save lives and provide critical services to Michiganders through this crisis, we’re going to need flexibility and support from the federal government," said Chris Kolb, state budget director, last month.
Gov. Gretchen Whitmer had a similar message for Congress, during recent testimony to a House panel:
"I appreciate the federal assistance provided to states to date, but more is needed to support our response to this crisis. States are facing budget shortfalls that will require us to make impossible choices that will harm communities from border to border. A broader solution is needed, and Congress must come together to provide it."
The reality is the federal government cannot afford to bail out Michigan and every other state feeling the sting of their self-imposed lockdowns.
Congress has already taken extensive and unprecedented action to send funding directly to individuals, businesses, states and local governments to deal with the financial challenges surrounding the virus.
In May, the Democratic-controlled House passed yet another relief bill, a massive $3 trillion wish list that would do much more than provide targeted virus aid. The Republican majority in the Senate is wisely holding off on this measure.
The states crying the loudest for additional help are also the ones who have a history of making bad financial decisions.
As Heritage Foundation President Kay C. James has noted: “Bailing out states is, simply put, a bad idea. It shields politicians from the consequences of their actions and encourages the same reckless spending habits that got them into a financial mess in the first place.”
To date, the federal government is expected to take on $8 trillion more in debt over the next decade in the wake of the pandemic, and just paying down the interest on that sum will demand “massive new taxes and spending cuts,” argued Brain Riedl, a Manhattan Institute senior fellow, in our pages.
Riedl also states the government must get its spending under control, and when the immediate threat of the virus subsides Congress should get serious about a deficit-reduction plan.
Whitmer and the Legislature are going to have to take responsibility for the state’s budget woes, and soon.