In Washington, a discussion arose about whether certain US states should be saved from bankruptcy.
Democrats in the House of Representatives hope in May to allocate several hundred billion dollars for a local government bailout program. They have obvious selfish interest: it is precisely the liberal states that are closest to bankruptcy.
The COVID-19 epidemic and economic crisis will hit all US states without exception. Everywhere unemployment soared to a level unprecedented since the Great Depression. Thousands of businesses closing everywhere.
However, the worst situation is with several US states, the situation in which was gloomy even before the current crisis. This is mainly about Illinois and to a lesser extent about New Jersey.
Illinois and Chicago are completely crushed by their retirement obligations. The hole in their pension budget exceeds $40 billion, which is simply nowhere to take. Local taxes have already been brought to the limit, the cost of living is very high, people are leaving. In 2018, Illinois lost 140 thousand inhabitants or about 7 people for every 1000.
Senate Majority Leader Mitch McConnell said he is opposed to allocating any funds to the incompetent state authorities. If they can not cope with their debts and obligations, then for them there is only one way вЂ” bankruptcy.
In US history, no state has ever gone through bankruptcy proceedings. Nevertheless, about 600 cities had such an experience. The most famous example is the bankruptcy of Detroit in 2013.
In the course of bankruptcy, the city leadership went for restructuring, a sharp reduction in social expenses (primarily pensions), and the privatization of municipal property. Illinois will expect roughly the same if it does not receive emergency assistance from Washington.