Writing for the Niskanen Center, Research Professor Jodie Kirshner argues that municipal bankruptcy is not a solution to the economic crisis brought on by the COVID-19 pandemic. Instead, Kirshner calls for expanding federal aid to create alternatives to bankrupty.
To the extent that, following the virus’s spread, America’s cities will be left with more fundamental economic problems than simply a one-time, bounded expense, urban success over the next few years will depend not on renegotiating debt in bankruptcy but on enabling people to keep jobs, getting people back into lost jobs, and enabling businesses to reopen. Meaningful economic mobility for individual residents, rather than bankruptcy, would be necessary to stabilize municipal budgets. The more small businesses the country can keep afloat and the more citizens it can keep employed, the faster cities can more broadly regain economic strength.