Earlier this week, Senate majority leader Mitch McConnell suggested that states strapped by the demands of the COVID-19 crisis should declare bankruptcy rather than turn to the federal government for assistance. Whether a slip of the tongue or a genuine strategy, the suggestion was both audacious and revealing. McConnell, a Republican from Kentucky, was not arguing for fiscal restraint but in defense of a half-trillion-dollar aid package — almost all of it reserved for business assistance. According to his twisted logic, public entities should be subjected to “market discipline” (even in an environment of complete market failure) while those that are actually in the private market should be bailed out.

The federal refusal to provide unconditional funding to state and local governments amounts to nothing more than sharp-toothed austerity in stimulus clothing. The aid to states provided in the Families First and Coronavirus Aid, Relief, and Economic Security (CARES) Acts is targeted narrowly at propping up unemployment insurance systems or at meeting unanticipated pandemic-related expenses. But the pressing issue for states is not just ventilators and face masks, it is the collapse in state revenues. The shortfall is estimated at about $500 billion — twice as large as the hit to state budgets during the entire Great Recession.

This federal parsimony is part of a longer historical pattern. Outside of transfers for health programs, federal aid to state and local governments has dropped steadily since the 1980s. Much of this money is now block-granted, which both caps the federal commitment and gives states wide discretion on how to allocate the money. The Temporary Assistance for Needy Families (TANF) block grant, for example, has not increased since 1996 — a cut of almost 40 percent in real dollars. And none of this federal commitment carries with it any countercyclical mechanism, any guarantee that national lawmakers will step in to soften the blow of a recession.