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The rerality is that staes can not declare bankrupsy. Ifn they di their creitors could divide any assets which most staes have plenty of. The losers would be the people really has that ends all services.Can you even imgine what would happen tot heir trying to borrow money for a bond issue for instance.
It's no different than in indivual who screws up his credit rating. The results is no mroe credit and he has to actually live within his means. I'd say its long past time the states learned to do that. As for selling off assets, they are already doing that. Illinois leased out something (I think it was a major airport) and the revenue was supposed to last for 10 years. They used it all up in one year. Does that sound responsible? These states need a wakeup call. If it ends up hurting the residents in those states maybe it will serve as a wakeup call to them too and they won't keep voting for the same weasels.
If the states don't pay the pensions, will all the taxes connected with those pensions go down??? I don't think so we will still be raked over the coals one way or the other.
Why should I pay for California's irresponsibility to meet its own financial obligations born out of fiscal drunken spending and golden pensions that could never possibly be met when they were negotiated with the unions.
California, and its residents, are responsible for their own fiscal matters. No one other than California voted to award these ridiculous financial obligations. They made the wine and now they have to drink it. If it has turned sour, it's not our problem but California's problem alone.
Don't come crying to me for my money to bail their sorry ass out.
I love the way people want government to be more like businesses. When times get really tough the businesses bankrupt and throw the losses unto their creditors and suppliers while the owners and managers only lose their initial investment and salaries. This is completely absurd. I agree the stock holders should lose their investments but I also think that anyone with managerial responsibility should also be liable to the full extent of their personal fortune. That would place the responsibility for the losses squarely on the people that created them.
As states can always increase taxes to meet their obligations they are different from a business and should handle excess obligations in a different manner. They should have to default on their loans because the lenders should have known what they were doing before they default on the pensions. States should never be allowed to default on their pension obligations because the retired employees have no recourse.
The simple solution is to have (require) the states to fully fund their debt and pension obligations while limiting their borrowing to financing capital projects while paying current expenses out of current funds.
Should States be allowed to file for bankruptcy?
Now their only option is to increase taxes to pay for the overburden. Even cutting all the spending is not going to fix it.
Why not a 3rd way out?
Quote:
Facing huge budget difficulties, New Jersey Gov. Chris Christie has been showing other states how to survive — namely, by taking on the government-employee unions.
Christie's battles with the teachers unions over the past year have produced countless YouTube hits. And last month, he got a law passed to limit wage hikes — from labor arbitrations between the state and public-employee unions — to a 2 percent average annual increase.
As New Jersey, New York, California, and Illinois — the four states with the highest insurance premiums on their bonds — face life without a compliant Congress to approve their pleas for more cash, they'll increasingly have to follow Christie's example and rein in their unions.
As Margaret Thatcher famously said, the problem with socialism is that sooner or later "you run out of other people's money." Let States Declare Bankruptcy
Initially, Progressives will oppose the idea of state bankruptcies. But when House Conservatives make clear that no more aid will be forthcoming and that the stimulus spigot is turned off, at least some Progressives will realize this is their best option.
Then, fiscal necessity will have achieved what so many of us want — a return of true local government.
Giving insolvent states the power to break their union contracts would alter dramatically the balance of political power all across the nation. No longer would municipal unions have the financial ability to underwrite the Democratic Party.
Gone from our politics would be $200 million that the American Federation of Teachers, the National Education Association, SEIU and AFSCME together spent on political action in the last election cycle.
I love the way people want government to be more like businesses. When times get really tough the businesses bankrupt and throw the losses unto their creditors and suppliers while the owners and managers only lose their initial investment and salaries. This is completely absurd. I agree the stock holders should lose their investments but I also think that anyone with managerial responsibility should also be liable to the full extent of their personal fortune. That would place the responsibility for the losses squarely on the people that created them.
As states can always increase taxes to meet their obligations they are different from a business and should handle excess obligations in a different manner. They should have to default on their loans because the lenders should have known what they were doing before they default on the pensions. States should never be allowed to default on their pension obligations because the retired employees have no recourse.
I love the way people want government to be more like businesses. When times get really tough the businesses bankrupt and throw the losses unto their creditors and suppliers while the owners and managers only lose their initial investment and salaries. This is completely absurd. I agree the stock holders should lose their investments but I also think that anyone with managerial responsibility should also be liable to the full extent of their personal fortune. That would place the responsibility for the losses squarely on the people that created them.
As states can always increase taxes to meet their obligations they are different from a business and should handle excess obligations in a different manner. They should have to default on their loans because the lenders should have known what they were doing before they default on the pensions. States should never be allowed to default on their pension obligations because the retired employees have no recourse.
The simple solution is to have (require) the states to fully fund their debt and pension obligations while limiting their borrowing to financing capital projects while paying current expenses out of current funds.
I agree with much of your writing yet the "horse has already left the barn" in states like Ca. I agree with the laws of a balanced budget but they can't be retroactive.
States in trouble now need to solve their own problems and not come to the Federal government "hat in hand" looking for the money to fill their fiscal irresponsibility. They, and they alone, need to provide the funds to meet their own obligations. If that means raising taxes, or cutting services, so be it. Perhaps they should have to renegotiate the pensions that have placed them in a bankruptcy type situation. They are the ones who made their wine, now it's time to drink it. I say we who don't live in CA, and had no say in the fiscal matters there, are not responsible in the least bit. If my neighbor spends himnself into bankruptcy, is it me or his other neighbors, that are obligated to make him whole again? Hardly.
States like Ca need to learn how to run their government without forcing the Federal government to cover their shortfalls simply because they were irresponsible in their own spending in the first instance. It's their mess and they need to clean it up.
Does he have any proposals for the Federal Government to escape THEIR pension obligations?
Didn't think so.
So far anyhow.....the Federal Government isn't about to go into bankruptcy, but certain States are. I presume THAT'S why he doesn't mention the Federal Government.
I imagine however that the way things are "progressing" with the progressives in power, we might have to cross that bridge when we come to it.
I agree. Individuals can declare bankruptcy and states should be able too as well --but it will come with a huge hit to their credit rating which means it will be much harder for them to borrow money in the future. Actually, now that I think about it, that's a good thing too.
GM should have been allowed to go bankrupt as well to let them esacape their onerous pensions and be able to really compete with foreign car companies.
Why should the rest of the states be on the hook to continually bail out California that insists on providing more and more unfunded benefits that other states do not have?
So far anyhow.....the Federal Government isn't about to go into bankruptcy, but certain States are. I presume THAT'S why he doesn't mention the Federal Government.
I imagine however that the way things are "progressing" with the progressives in power, we might have to cross that bridge when we come to it.
We may not be bankrupt, but we can no more afford his nice pension and lifetime health benefits than California can afford their obligations.
Nice dodge on your behalf for Gingrich though.
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we will still be raked over the coals one way or the other.
Allow States to go bankrupt
