State funding fight underscores Schumer-McConnell war

The battle over providing money to cash-strapped state governments struggling through the coronavirus pandemic is underscoring the nasty relationship between the Senate’s Democratic and GOP leaders.

Senate Majority Leader Mitch McConnell (R-Ky.) is the leading skeptic of giving money to states, while Senate Minority Leader Charles Schumer (D-N.Y.) is under intense pressure to deliver for New York, the state hit hardest by the pandemic.

McConnell came under criticism from members of both parties last week when he suggested an openness to changing the law to allow states to go into bankruptcy, rather than just given them a federal bailout.

Asked if he thought that McConnell doesn’t want to let New York have more money because of a personal political feud with Schumer, Rep. Pete King (R-N.Y.) said, “Yeah, I think some of that.”

“I don’t know the exact relationship between Chuck and McConnell. I don’t think it’s too good,” he added.

A Senate Republican aide rejected speculation that McConnell’s rocky relationship with Schumer was a key factor in him blocking more money for New York.

The source pointed out that there’s opposition with the Senate and House GOP conferences to approving more state and local rescue money and that McConnell never ruled out more money for but wanted to “pause” the torrents of funds being appropriated by Congress “so lawmakers could evaluate the effectiveness of the relief programs.”

King also said there are other reasons for the political battles.

Many red-state Republicans like to beat up on New York to rev up conservatives at home, he said.

“We saw it on the 9/11 health care legislation, we saw it on the [Hurricane] Sandy aid,” said King, referring to two legislative packages approved by Congress after lengthy battles.

King said McConnell’s stated reason for opposing more funding for New York and other states — that it could be used to bail out pension funds — doesn’t make any sense. 

“I don’t know whether he was trying to stake out a bargaining position or appeal to a base in his state, but all this talk about New York pension funds and mismanagement causing this — that’s b.s.,” King said. “It’s a totally phony argument. No one is talking about getting a bailout for state pension fund. We’re talking about getting money directly related to the coronavirus.”

The Schumer-McConnell relationship has come into focus during the battle as Democrats seek to unseat the GOP leader in this year’s elections.

Schumer played a key role in recruiting McConnell’s likely general election opponent, former Marine Corps fighter pilot Amy McGrath, who with the Democratic leader’s help raised $12.8 million in the first three months of 2020.  

Schumer has come under veiled criticism from New York Gov. Andrew Cuomo (D), who has expressed disappointment that previous bills approved by Congress did not include more money for state governments.

Cuomo declared the level of state aid in the $2.2 trillion CARES Act “terrible” for New York.  

Schumer attempted to largely cut McConnell out of negotiations earlier this month on an interim coronavirus relief package by working instead with Treasury Secretary Steven Mnuchin.

Some Democrats see an element of payback in McConnell’s intervention to block more funding for state and local governments in the latest coronavirus relief bill, which Schumer played a lead role in negotiating.

“For Sen. McConnell to try to exert some political payback is certainly within his character, if you look him historically,” said Leo Haggerty, a Kentucky-based Democratic political consultant.

But Haggerty thinks McConnell is also motivated by setting up a contrast with New York and California more generally.

“He’s got notorious bad polling numbers in Kentucky,” Haggerty said. “In the last few months, polling that I’ve seen in the legislative races, the county races have showed that McConnell’s polling numbers are at all-time record lows and that President Trump’s numbers, which were phenomenal at this time last year — his negatives and his positives are almost about the same in Kentucky now.

“I think what McConnell is choosing to do is to change the subject. ‘I’m protecting the taxpayers in Kentucky from New York and California,’” he said. “Of course, his likely opponent, Amy McGrath, gets most of her funding out of state from states like California and New York.”

The GOP leader’s opposition to more state rescue funding could mobilize teachers in Kentucky, a powerful interest group, who have pension worries of their own. Kentucky’s teachers played a key role in the 2019 gubernatorial race helping defeat Republican Gov. Matt Bevin and electing Democrat Andy Beshear.

“I think Mitch McConnell needs to remember that teachers elected Andy Beshear, and I suspect or I hope that his statement was more of a negotiating stance,” said Al Cross, director of the Institute of Rural Journalism and Community Issues and a longtime commentator on Kentucky politics.

“McConnell has said repeatedly that anything Congress appropriates from here on out should be coronavirus related,” he noted.

But Cross pointed out that pension funds are heavily invested in assets that have been hurt by the economic downturn caused by the pandemic.  

Kentucky’s state-employee pension problem is also seriously underfunded, a problem compounded by last month’s severe downtown in the market and uncertain prospects over how well stocks and other assets will recover over the next couple years.

McConnell came under a firestorm of criticism last week by suggesting Congress explore allowing state governments to declare bankruptcy amid severe budget shortfalls.

Beshear on Saturday said “I very strongly disagree” with McConnell and warned bankruptcy for a state “would be disastrous.” He said if a state such as Kentucky declared bankruptcy it could empower a judge to raise taxes or cut key services without the approval of voters.  

McConnell responded to the uproar in a radio interview Monday afternoon by softening his suggestion that states consider bankruptcy.  

“I wasn’t saying they had to take bankruptcy. I think it’s just an option to be looked at. Unfortunately, states don’t have that option now, cities do. I wasn’t necessarily recommending it, but I was pointing out that they have their own fiscal problems that predate the coronavirus,” McConnell said Monday on “The Guy Benson Show.”

“I was not interested in borrowing money from future generations to fix age-old problems that states have that they created themselves wholly unrelated to this,” he added.

He said he would not rule out adding more money for state and local governments in the next large coronavirus relief package, which Congress will begin working on next month.

“There probably will be another state and local funding bill, but we need to make sure that we achieve something that will go beyond simply sending out money,” McConnell said.

Cross said despite McConnell’s partisan reputation in Washington, he has tried to maintain good working relationships with Democratic officials in Kentucky.

“He knows that’s politically smart. There are a lot of Democrats in the state who vote for him, and he doesn’t need the leaders of their party to start banging the tub against him,” he said.

Scott Jennings, an adviser to McConnell, dismissed the idea that McConnell’s sour relationship with Schumer is a motivating factor or that he wants to see blue states go bankrupt.

“I think the point he was making was very clear, it’s been twisted by the Democrats, and that is a lot of these states and cities asking for money had pre-existing problems,” he said.

“We’re passing these funding things so quickly, there’s not a lot of time for the public to consider what we’re doing. If you show up and start funneling money to states and cities in huge amounts it all gets couched as, ‘Well, it’s part of the emergency spending,’” he added.

“Most people would say this is not a time to be sneaking in other extracurricular problems.”