These 10 U.S. States Are Best Prepared for a Deep Recession
This week Treasury Secretary Steven Mnuchin called out “mismanaged” states, suggesting that the federal government should not be responsible for bailing out states that had poorly managed budgets before the coronavirus pandemic brought business activity to a halt, triggering a deep recession.
Mnuchin’s comments echoed those of Senate Majority Leader Mitch McConnell, who earlier said that he was in favor of allowing states to declare bankruptcy. (It’s important to note that, under current laws, states cannot go bankrupt, only default on their debts.)
Congress is not “interested in solving their pension problems for them. We’re not interested in rescuing them from bad decisions they’ve made in the past,” the Kentucky senator told Fox News.
By some estimates, states could be facing their deepest budget shortfall on record due to the COVID-19 crisis. The Center on Budget and Policy Priorities (CBPP), a Washington, D.C.-based think tank, believes states could collectively see a budget deficit of $290 billion in 2021, which would be greater than during the 2001 recession and 2007-2008 global financial crisis.
So which states were best prepared for a recession such as the one we’ve likely already entered? That’s a question I was curious to have answered.
There are many factors to consider, including tax revenue, annual spending (particularly on entitlements such as Medicaid), cash reserves and more.