Apr 27, 2020

Should we let states go bankrupt or send help?

Should we let states go bankrupt or send help?

Plus, a question about Andrew Cuomo's past.

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Today’s read: 8 minutes.

Should we bail out states, a question about Gov. Cuomo’s alleged history of corruption and a very important story about the U.S. food supply.

New York Gov. Andrew Cuomo, who has become a media darling during the coronavirus pandemic, wasn’t always getting this kind of praise in New York. Photo: Pat Arnow

Tangle experiment.

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  • There may be a change of tone and content from the White House on coronavirus. On Friday, the president’s daily coronavirus task force briefing was just 22 minutes long, the shortest yet. And he took no questions afterward. Axios scooped that POTUS and his team are planning to pivot their messaging to highlight the business recovery success stories, and they plan to shorten the president’s time at the mic after several controversies erupted from his musings on medical treatments. Trump’s poll numbers in crucial swing states have also been suffering, and many of his advisers think it’s because of his “marathon briefings” and how he’s acting in front of the cameras. Amidst warning signs the briefings could hurt his re-election chances, the White House canceled today’s scheduled briefing, and new press secretary Kayleigh McEnany told reporters future briefings “might have a new look to them, a new focus to them.” Click.
  • As the coronavirus case total nears 3 million globally, some states are beginning to reopen this week. Georgia Gov. Brian Kemp gave the green light to salons, bowling alleys, barbershops and other businesses this week. Texas Gov. Greg Abbot is trying to strike some middle ground between what Georgia and other Republican-led states are doing. Colorado’s Democratic Gov. Jared Polis permitted some businesses like salons to reopen and will also allow elective procedures to resume with certain precautions. Click.
  • Over the weekend, a 1993 interview on CNN’s Larry King Live resurfaced, and it shows Tara Reade’s mother discussing “problems” her daughter had with a “prominent Senator” in Washington D.C. Reade, who recently alleged that Biden sexually assaulted her, has had her credibility questioned by news organizations across the country. Tangle covered the latest allegations here when they surfaced a few weeks ago. But she’s repeatedly said that she told her mom and other family members about the assault and that her mother even called into a CNN show about them shortly after to ask for advice. The interview, which came just months after the alleged incident, gives another layer of credibility to Reade’s story. Click.

What D.C. is talking about.

Bailing out the states. Last week, Senate Majority Leader Mitch McConnell (R-KY) told radio host Hugh Hewitt that he’d prefer to let states struggling with their budgets and skyrocketing employee pension costs to declare bankruptcy, rather than giving them a federal bailout. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations,” McConnell said. The comments set off a firestorm and the debate has been raging into this week, as a few states begin reopening small clusters of their economies. House Speaker Nancy Pelosi (D-CA) said she plans to push for a “major package” for state and local governments in the next coronavirus relief bill, which Congres is already discussing.

Last week, McConnell blocked additional state and local funding that Democrats tried to include as part of the bill that refilled the small business lending program the federal government set up. He then began referring to the proposed relief as “blue state bailouts,” saying the pandemic shouldn’t be an excuse to “rescue” states from bad decisions they made in the past. New York Gov. Andrew Cuomo responded with disdain, saying New York puts more money into the federal coffers than it contributes, unlike McConnell’s home state of Kentucky. “Senator McConnell, who’s getting bailed out here?” Cuomo asked. “It’s your state that is living on the money that we generate.”

What the left is saying.

The states have been far more responsible than the federal government, on average, and in fact many have built out “rainy day funds” worth billions of dollars. But none could have prepared for or predicted for the economic fallout we are facing now. The New York Daily News’ editorial board published the most biting response to McConnell, noting that 39.5% of Kentucky’s “overall budget came from Washington, making it the fourth most DC-dependent state in the nation. By another measure, Kentucky is the nation’s second-most federally dependent state.” The board added that McConnell is right to say the federal government shouldn’t “prop up rickety pension systems and otherwise unsustainable state spending habits,” but New York sends $30 billion more to Washington than it gets back every year, and this nightmare has nothing to do with poor budget management and everything to do with COVID-19.

In The New York Times, Paul Krugman noted that the economics of the situation make the decision obvious: the federal government can legally borrow money at a far cheaper rate than states, and they should. If there was ever a time for the feds to run a big budget deficit and help out the states, this is it. The states are “facing a combination of collapsing revenue and soaring expenses,” Krugman noted. He also pointed out that it’s not even clear whether states have the legal right to declare bankruptcy, and even if they did it would not alleviate their issues — it would just cause a national financial crisis. Some on the left are also wondering aloud why we’ll bail out giant corporations or the airline industry that employ a few thousand people but we won’t bail out state governments that actually impact millions of people.

What the right is saying.

Most Republicans aren’t clamoring to bankrupt the states, but they’re also quite skeptical of any federal bailout plans. McConnell and other Republicans have specifically used Illinois as an example, a state whose unfunded pension liability — or the debt the state owes to government employees’ retirement funds — increased 60% between 2010 and last year even as the stock market more than doubled. Now they want money from the federal government to rescue those pensions when they weren’t going to be able to afford them anyway. Even New York state, which Cuomo and the left has pretended was in a great financial situation pre-pandemic, had a $6 billion state deficit thanks to Medicaid costs and high earners fleeing New York because of high taxes. That isn’t the federal government’s fault, and it’s not their problem now.

While McConnell’s “blue state bailouts” comments dominated the headlines, he also made more tempered remarks on Fox News, saying any state or local aid must be specifically linked to the pandemic and shouldn’t be viewed as an opportunity for “revenue replacement.” Ed Morrissey made a similar argument, saying huge borrowing “has to get targeted as closely as possible to the actual economic damage of the pandemic, not the damage done by bad policies over several decades in the states.” The Wall Street Journal Editorial Board laid out its solution, which included federal help but with conditions — like cuts to nonessential spending and reductions in public pension benefits. “Keep in mind that Congress’s $2.2 trillion Cares Act last month included a $150 billion blank check to states plus $90 billion for schools, public transit and Medicaid,” the board wrote. “To put these numbers in perspective: All state tax revenues during the last three months of 2019 totaled $254 billion. So Washington’s last state infusion is roughly equal to three months of tax collections.” In The New York Post, the yin to The New York Daily News’s yang, E.J. McMahon wrote that it is “reasonable” to ask for federal help now, but the money should come with stipulations that reduce wage increases for government employees and require states or large cities to “produce budgets that are balanced on the basis of Generally Accepted Accounting Principles.”

My take.

If McConnell had just come out and said “we’ll help the states, but we need to be responsible about addressing needs that were only born out of the coronavirus pandemic,” I think 90% of America would have nodded their head in agreement. Instead, he tried to brand this help as “blue state bailouts” and took potshots at governors whose citizens are dying by the thousands, a political move that is blowing up in his face (there were plenty of Republicans who criticized McConnell’s framing, even if they agreed with his foundational argument). It was an uncharacteristically sloppy move by McConnell, one of the more shrewd politicians of our generation, and the Cuomo response is a simple, accurate and effective one: “Blue state bailouts? We give more money to the feds and take less back than your state.”

Indeed, it seems worth considering what McConnell has done for his own state as the leader of the Senate. The New York Daily News noted that Kentucky has 1/20th of the per capita death rate that New York has from coronavirus, but got about the same amount of money per resident in the coronavirus care package. Kentucky’s entire state budget is 39.5% federal money, and McConnell has not been shy about why that is so: “All 100 senators may have one vote,” he said last year. “But they’re not all equal. Kentucky benefits from having one of its own setting the agenda for the country.”

Yes, it apparently does. I hate to get down in the mud with this kind of political discourse, but it seems necessary to note McConnell’s hypocrisy here. I also find the Illinois argument a stupid strawman. Some Republicans are pointing to Illinois because it was in a precarious position before COVID-19. It’s just like pointing at Chicago to prove restricting guns doesn’t prevent gun violence. Is it true gun violence is bad in Chicago? Yes (sorry Illinois). But it’s also true that, statistically, Chicago is an outlier. The same can be said of Illinois, which has a particularly bad pension situation. But, again, the state is a huge contributor to federal funds and also has a booming economy — one that needs some help regardless of how badly the state has mismanaged its budget.

The left has made some weak comparisons, too, like “we’re going to bail out companies but not states?” Many of those corporate bailouts come with conditions that the same liberals probably wouldn’t want to be instituted in state government bailouts, so I’d caution them to be careful what they wish for. Because they’re probably going to get it — and it will cause a whole new slew of problems to deal with.

Regardless, my actual take here is that we should be applying the same logic to the financial aid we give states that we are applying to states reopening: what works for New York isn’t going to be what works for Kentucky. A ton of money has changed hands already, as WSJ’s editorial board noted, and we need to move carefully through the next steps. The needs of New York are not going to be the needs of Kentucky. We shouldn’t decide that $1 trillion is going to go to the states and then divide that $1 trillion by 50. We should look at the state budgets, how they’re going to be impacted and what parts of the budget were hurt the most by COVID-19. I actually thought The Washington Post’s editorial on this was the most well-reasoned: it acknowledged a lot of money has already changed hands, agreed that Illinois — with the worst-in-the-nation pension shortfall — has budgetary issues unrelated to COVID-19, but laid out the facts to show states were actually in relatively good financial positions and have been mostly responsible during the economic boom of the last decade. And now, facing an unprecedented crisis, they should be getting federal aid.

Your questions, answered.

Reminder: Reader questions are a big part of Tangle. To ask a question, all you have to do is reply to this email and write in. Give it a try!

Q: I’m seeing a lot of praise for Cuomo’s response to COVID-19 and saw the last Tangle question regarding him. I’m personally a fan of how transparent, informed and straight he’s been on a daily basis in his briefings. But with the positive Cuomo press, I see people saying how he’s been corrupt as Governor in the past. Has he always had this reputation in his term? And does DeBlasio share a similar rep?

— Clark, New York, NY

Tangle: I, too, have found myself reluctantly heaping praise onto Cuomo for his daily briefings. I say reluctant not because of any unique hatred or disdain for Cuomo that I have, but because of my general (and well-founded) skepticism of politicians that’s matched by an overarching reluctance to heap praise on any lawmaker for doing what is just or right. We should be getting accurate, transparent and informed information from our governors, president, senators and representatives. Anything less during a time like this should be appalling.

Nevertheless, Cuomo has enjoyed what can only be described as a love affair with the press as of late. The New York Post wrote that “New York women are crushing on Andrew Cuomo.” Chelsea Handler wrote him a love letter. Molly Jong-Fast explained “Why We Are Crushing On Andrew Cuomo Right Now.” This has also been reflected in polling numbers: Cuomo’s approval rating for his handling of coronavirus is 84% amongst New Yorkers, and despite being a Democrat he even has higher scores amongst New York Republicans than Trump does. That might be why the White House, led by a president who seems to loathe Cuomo, has reportedly been watching his daily press briefings and taking their cues from New York.

Given all this, and given your question, I think it’s safe to assume most readers know this narrative already: Cuomo’s pressers have been sober and heartfelt. He’s expressed real sympathy for the pain people are going through. He hasn’t minced words about the pain ahead. He has seemed, by all accounts, realistic and empathetic and hopeful all at once. Sure, his plans have lacked some finer details, but he’s not telling us the sky is red when it’s blue, and for most Americans right now that’s enough to earn an A grade.

It’s also, apparently, enough to make them forget how they felt about Cuomo just a few short months ago.

Before the coronavirus pandemic, “corrupt” was probably a word many people in the state of New York associated with Cuomo. That’s because one of Cuomo’s closest advisers, Joe Percoco, was indicted and convicted on charges of solicitations of bribery. When Gov. Cuomo gave the eulogy for his late father, Mario, he described Percoco as his father’s third son. Percoco worked for basically every Cuomo to ever hold public office, and was one of Andrew Cuomo’s closest aides. There is very little question about whether he committed the crimes he was convicted of, but Cuomo himself was never accused of any wrongdoing in an official capacity. Instead, he separated himself from the allegations and pledged not to interfere in the jury’s conviction.

Worse for Cuomo was the fact that one of his signature policies, the Buffalo Billion project, was used to help facilitate those bribes. The project was supposed to help revitalize one of New York’s struggling cities — instead, it was a tool for Percoco to collect hundreds of thousands of dollars to pay for a house he couldn’t afford. As Jeffrey Toobin wrote for the New Yorker, either Cuomo did or didn’t know about the scheme cooked up by his closest aides, and “whether Cuomo did or did not know about the alleged rot in his midst—the verdict on his governorship would be a harsh one.”

All of this, of course, came after Cuomo shut down the Moreland Commission, which was an entity he set up that was supposed to identify and eliminate corruption in Albany (the state’s capitol). “A two-term governor whose tenure has coincided with a quartet of high-profile corruption convictions might normally be heading to defeat, if he decided to run at all,” Politico wrote in 2018. “But Gov. Andrew Cuomo, who was never accused of wrongdoing during the trials, continues to poll well as he seeks a third term this year. And he appears to be unconcerned about any possible electoral consequences arising from those trials.”

That’s because Cuomo got to run against Cynthia Nixon, best known for her starring role in Sex and the City — a candidacy that was a liberal pipe dream from its launch, but one that lasted long enough for Cuomo to dominate her in the state’s governor race. Cuomo’s reputation, before all this, was not one of a comforter or a liberal darling or someone Democrats would ever consider running for president. It was of a cutthroat dealmaker. Someone who used political levers, compromise, gruff and angry negotiating tactics to get things done and keep the government running. Cuomo’s allies will tell you he’s the most productive governor in any state we’ve seen in the last 10 years — but they would seldom make the case he’s a comforting or kind or empathetic politician. In 2017 he was described as “a muscular, messy, rough-edged leader shouting for the common man.” That’s who Cuomo was.

In the coronavirus pandemic, all of these tales of corruption and self-dealing and bribery and rough edges and muscular men seem a distant memory — but they are there nonetheless. Cuomo has opened his heart and put it on public display recently, making the coronavirus pandemic a personal tale of his own heartache along with that of his fellow New Yorkers. And it’s been effective. But it has not been the reputation he carried into the pandemic — in fact, it’s been quite the opposite.

As for de Blasio, what can I say? His reputation has been nothing like Cuomo’s, and he’s only shot himself in the foot during the coronavirus pandemic. From being a Boston Red Sox fan to going to the gym after ordering everyone to stay home to bailing on New York City to launch an obviously failed presidential bid, de Blasio has seemingly managed to piss off every New Yorker of every stripe at one time or another. It got so bad last year that Vox had to run one of its patented explainer stories: “Why Bill de Blasio is so hated, explained.” Woof.

That being said, it’s worth noting that the Vox explainer piece also makes a case for de Blasio: he’s delivered on a lot of his liberal promises (universal pre-K, expanding sick leave, reducing stop-and-frisk, and even a minimum wage hike). The piece sort of makes the case that the problem is us, not de Blasio. Either way, Cuomo and de Blasio’s paths have been divergent, and they’ve only split further during the pandemic’s crushing impact on New York City.

A story that matters.

When the CDC first pushed Americans to stop patronizing restaurants, it set off a massive chain reaction: suddenly, millions of farmers were stuck with food that was supposed to go to restaurants but was no longer needed. At the same time, the restaurant industry spun off into an unforeseen crisis, with hundreds of thousands of people losing their jobs in a matter of weeks. While food banks across the country scramble to meet a “massive surge in demand,” there are “tens of millions of pounds of American-grown produce rotting in fields,” Politico reports. Americans are struggling to feed their families and farms are losing billions of dollars in revenue at the same time, but the two ends haven’t been able to coordinate on what should be an opportunity to save families and save some cash for farmers. The Agriculture Department took more than a month to buy up surplus produce, even though calls for such a move had been echoing around for some time. “It’s not a lack of food, it’s that the food is in one place and the demand is somewhere else and they haven’t been able to connect the dots,” Tom Vilsack, the agriculture secretary under President Barack Obama, said. “You’ve got to galvanize people.” Click.


  • 47%. The percentage of Americans who viewed China unfavorably in 2017.
  • 66%. The percentage of Americans who view China unfavorably now.
  • 9 in 10. The number of Americans who view China as a threat.
  • 95.8%. The percentage of Tangle readers who said they or someone they know has lost their job or faced reduced working hours because of coronavirus, according to last week’s poll.
  • 17.7%. The percentage of Tangle readers who said they are not registered under any political party, according to last week’s poll.
  • 17.9%. The percentage of Tangle readers who said they are not currently employed, according to last week’s poll.
  • 22.4%. The percentage of Tangle readers who said they make between $50,000 and $75,000 annually, the highest share of any income group, according to last week’s poll.
  • 50.3%. The percentage of Tangle readers who said they live less than one mile from the nearest supermarket, according to last week’s poll.
  • 59.9%. The percentage of all Americans who live less than one mile from the nearest food store, according to a USDA report from 2015.

Don’t forget.

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Have a nice day.

A scuba diving group is combining a clean ocean initiative with a response to the coronavirus pandemic. The Professional Association of Diving Instructors (PADI) is partnering with the company Rash’R to repurpose ocean plastic it collects into masks for people to wear when they go outside. The masks, which come with 5 replaceable filters and cool looking ocean-themed designs, cost just $20 and don’t turn a profit for either of the companies. “We are not profiting from this product,” Lisa Nicklin, vice president of consumer marketing at PADI, told CNN. “We're very much a heart-and-soul organization. We care about the ocean and our diver community, so we wanted to be able to put our hands on our hearts and say that we're not profiting off this difficult time.” 15,000 masks have already been pre-ordered and they have helped remove or reuse 1,267 pounds of ocean waste. Click.

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