The bankrupt agenda of the GOP congressional leadership

“I would certainly be in favor of allowing states to use the bankruptcy route.” – Senate Majority Leader Mitch McConnell, April 22, 2020

Senator Majority Leader McConnell, a master of the long game and never one to let a crisis go to waste, is using the economic fallout from the coronavirus crisis to push an agenda that threatens the sovereignty of states and our most popular federal programs.

Congress is considering whether to provide relief to state and local governments who have been staggered by the COVID costs and the related loss of tax revenue. One estimate shows a total $650 billion COVID-caused shortfall over the next 3 years.

Just as COVID-19 virus is encapsulated in the shell of a viral envelope, McConnell’s bankruptcy idea encapsulates a plan designed to weaken state sovereignty and hijack state budget decision making. How would his plan work?

In our federal system, states are sovereigns and if faced with insolvency, the state would decide what debts they would pay. Under McConnell’s scheme, state bankruptcy would be overseen by federal courts by a federal judge appointed by a President. In a blow to democracy and federalism, the priorities of a state would be replaced with the priorities of an unelected federal court magistrate.

McConnell has specifically highlighted state pension debts as a reason to subject states to federal bankruptcy law. As many states’ constitutions (like Washington’s) prohibit impairing already committed pension and retiree health benefits, a federally overseen bankruptcy could supersede the state’s pension protections and subject them to reductions or elimination. In addition, there is a political “dividend” of undermining public employees and their unions which tend to support Democrats.

As if that was not enough to power this germ of an idea, some in the White House see conditioning assistance to states as leverage to force Governors to loosen their social distancing restrictions and other COVID public health actions sooner than they and the science, would recommend.

The “bankruptcy” strategy is also being used to further conservatives long running project to privatize the enormously popular Social Security and Medicare programs. McConnell and the White House are insisting that “pausing” payroll taxes (used to fund Social Security and Medicare) be included in the next COVID relief package. The objective is to undermine middle class support by offering a bigger paycheck and then, as the Social Security and Medicare Trust Funds become drained of revenue, erode confidence that the programs will be there when they retire.

A conservative made “bankruptcy crisis” will be declared along with solutions that finally undo these two popular Democrat created New Deal and Great Society programs. The response will likely include limiting benefits to the truly needy through “means-testing” thus converting a social insurance program into a welfare program. Then, only the poorest and least politically powerful will have a stake in defending the programs.

Everyone else will be assured that a permanent payroll tax cut will allow them to choose to spend on privatized health coverage “better” than Medicare and Wall Street backed retirement accounts “better” than Social Security.

Even the Post Office, a constitutionally authorized government activity, is a target of this bankruptcy strategy. Long before the White House feud with Jeff Bezos led to the accusation of the Post Office under-charging Amazon, Republicans have sought to bankrupt the Post Office. A Bush-era law required it to fund pension and health costs 75 years in advance. The Congress gets to call the shots on much of their business model. On top of that, the pension reserve is only allowed to invest in government bonds.

The bankruptcy goal is not just ideological. It’s also about private profits.

No government function is off limits. Privatized schools, privatized student loans, private toll roads, privatized parking enforcement, privatized prisons are all recent financial “innovations.”

The true bankruptcy is the current Republican leaderships’ morality and failure to make our capitalist system safe for democracy.

Larry Dzieza has been an Olympia resident since 1990 and recently retired from a public service career. He is a member of The Olympian’s 2020 Board of Contributors. Reach him at larryboc2020@gmail.com.