The Republican-dominated Senate’s unwillingness to back a robust stimulus bill may be part of a longer-range political strategy. Without help from Congress, states are in desperate financial shape because, unlike the federal government, state governments (with the exception of Vermont) must balance their budgets. Since the start of the pandemic, state tax revenues have fallen off dramatically. Without a federal subsidy, states may be forced to go to court to restructure their debt—and many federal judges are now far-right Trump appointees who could demand that blue states like New York cut back on safety-net spending programs. Such cutbacks would undermine popular support for leaders of those states while bailing out wealthy bond holders, many of whom are big Republican donors. Democrats’ best short-term chance at defeating this strategy would be to win control of the Senate by taking both Georgia Senate seats up for a runoff vote in January; longer-term, states may have to set up their own banks and/or issue their own currencies.
Richard Heinberg, Museletter #333: Making America ungovernable