Many of the states with the most aggressive shutdowns came into the coronavirus epidemic with massive deficits. Now their revenue is collapsing as income and sales tax disappear, and their expenses are increasing rapidly as millions are thrown out of work.
The 800-lb gorilla in the corner is what happens as the state governments go insolvent?
The federal deficit is already ballooning to record levels. Should the federal government step in to help the states?
Or should they let the states’ creditors and pensioners get pennies on the dollar for investments?
Can states afford to continue the shutdowns?
For background, Illinois is the first state to beg for a bailout:
New York state has a huge deficit. It may not be far behind:
The state of California had a large surplus with a growing economy. It looks like that is turning to massive deficits and economic depression: