Should Illinois therefore Chicago. Get a federal bailout of Penion debt? Now that Puerto Rico did? (2015, bankrupt)

[BRU67]

Originally Posted by IrishIllini

Exactly.

True.

[IrishIllini]

Originally Posted by Antonio Montana

Yes, there are other states that have financial issues....but it's been documented that Illinois has one of the worse, if not THE WORST financial crisis in the nation. If you think Illinois's situation is not much different from other states, you're lying to yourself and/or you're being foolish. Come on, now.

I understand IL is in worse shape, but not by as much as you may think.

[LeotheOrangeCat]

here's a pretty good article about the legal issues involved. They're complicated. Among other things, Congress would need to amend the bankruptcy code to allow states to file for bankruptcy. As part of the bankruptcy, the Federal government could provide financing to the State, but the financing would be conditioned on financial/structural reforms.

What Happens When A State Runs Out Of Money? - Law360

[NealIRC]

Originally Posted by PerseusVeil

Illinois continues to support other states, as it has done for years, at its own taxpayers expense.

Got any examples of this?

[chicagobear]

My prediction is that mass inflation is going to bail out lots of debtors down the road, especially state pension funds. The COLAs will be capped below the inflation rate and the amounts paid to the pensioners will go down in real terms. This has happened in many places in the world (Russia, various countries in South America).

[IrishIllini]

Originally Posted by NealIRC

Got any examples of this?

IL receives less money from the federal government than it pays. Texas, the largest of anti-government/regulation/handout states, receives more money from the federal government than it pays in taxes.

The irony.

[Graywhiskers]

Michigan required Detroit to default on its bonds, and trimmed city pensions, although not severely. This is probably the solution, or partial solution, for states and cities that are in pension trouble. The bondholders get hit the hardest.


With very low interest rates available on new bonds, it is very difficult or impossible for states or cities pension funds to get the expected 7% return on investments.


The Feds do not want to be responsible for bailing out all 50 states as well as cities, so probably they will not bail out Chicago. Although a precedent was set by bailing out NYC back in 1975 and in 1978. A direct loan in 1975, loan guarantees only in 1978.
Ford to City: Drop Dead in 1975 - NY Daily News
http://www.factcheck.org/2011/07/did-lugar-bail-out-nyc/


NYC repaid the loan, all fees and interest, so ultimately there was no cost to the Federal government.

[Vlajos]

Originally Posted by chicagobear

My prediction is that mass inflation is going to bail out lots of debtors down the road, especially state pension funds. The COLAs will be capped below the inflation rate and the amounts paid to the pensioners will go down in real terms. This has happened in many places in the world (Russia, various countries in South America).

This is likely with Trump's tax and spending plans. Inflation is likely to skyrocket making existing debt much more manageable.

[IrishIllini]

Originally Posted by PerseusVeil

Illinois puts more into the federal coffers than it gets back.
https://wallethub.com/edu/states-mos...vernment/2700/
Which States Are Givers and Which Are Takers? - The Atlantic

Again, I do not think the federal government will touch Illinois with a ten foot poll, but don't act like the way federal tax money is distributed is fair at all times. Illinois continues to support other states, as it has done for years, at its own taxpayers expense.

Then the far right criticizes places like Illinois for being "liberal cesspools" lol.

Let them sink if that's the case.

[MSchemist80]

What needs to happen is govt needs to get out of the business of providing private pensions to its workers. The purpose of govt isn't to enrich a select group of workers at the expense of tax payers. Pensions are not viable which is why the private sector has done away with them and the govt isn't able to run them very well. They need to switch to a 401k like the rest of the workforce.