Senator Mitch McConnell said in April he would be in favor of allowing states to declare bankruptcy, as the coronavirus pandemic drained tax revenues. States can't declare bankruptcy and credit agencies say they are are nowhere near it, but some lawyers have argued for it in the past.
Sen. Mitch McConnell comments suggesting he would let states go bankrupt ignited a firestorm of controversy.
Legal experts say states are not permitted to file for bankruptcy, but there has been a push in the past to give states a path to it if they find themselves in financial trouble. States tend to have a great deal of financial flexibility - they can raise taxes, cut spending, push some problems down to local governments, and issue debt. Primarily because of this, states tend to have pretty high credit ratings.
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