Treasury Secretary Mnuchin warns feds won’t bail out ‘mismanaged’ states

Treasury Secretary Steven Mnuchin said that while he was having conversations with states regarding federal stimulus money, the federal government was not focused on covering lost revenues for states with mismanaged finances.

Speaking to CNBC on Tuesday, Mnuchin made the remarks after being asked about harder-hit states and municipalities warning that they would run out of cash in four to six weeks.

“As you know, there was a chunk of money, it’s now all been sent out to the states and the cities to cover them for coronavirus expenses,” the Trump appointee said, referencing the $150 billion in funding allocated by Congress for states and territories in the wake of the crisis.

Mnuchin continued that states were permitted to allocate some of the funds to law enforcement costs, for example, as long as those police are being used for tasks related to the pandemic.

“And again we’ve been clear that to the extent people have to use police to enforce coronavirus issues, public safety, things like that, that they could allocate that money to the coronavirus issues, but that this was not about lost revenues and that’s the way the bill was written,” he continued.

Asked about recent conversations with New Jersey Gov. Phil Murphy regarding federal financial assistance, which both of them touted as “productive,” Mnuchin held firm that the government did not plan to simply wipe away their lost revenue.

“This isn’t just going to be a federal bailout of the states. On the other hand, this will be an ongoing discussion,” he said.

Mnuchin went on to say that on one hand, “this shouldn’t be a bailout of states that were mismanaged because of the coronavirus.” On the other, “States that had specifically large expenses because of the coronavirus, like New York and New Jersey, I think it was the right thing that the federal government gave them money.”

Democratic governors have sparred with the Trump administration and its GOP congressional allies recently over the issue of securing additional funding funding for state and local governments amid the pandemic.

Last week, responding to pressure from his Democratic colleagues, Senate Majority Leader Mitch McConnell (R-Ky.) suggested that state governments file for bankruptcy if they cannot handle their own coronavirus-caused financial burdens.


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