Posted on 8/7/2010, 12:51:40 AM by Iam1ru1-2
As Congress reconvenes next week to pass a $26 billion bailout of state and local governments entombed in their own deficits, we witness a foretaste of the crisis that will be the central event of the first half of next year: the collapse of state governments.
As long as the Democrats control Congress, they will continue to rubber-stamp Obama's requests for bailouts of profligate states. But when the Republicans take control, they will be less than forthcoming. Republicans will ask the central question: Why should taxpayers from states that have cut their budgets and observed spending restraint, pay for the extravagances of the other states? Why should forty-seven states have to pay for California, New York, and Michigan?
State government employment has risen by 16 percent since 1995 and overly generous Medicaid and other spending has climbed alongside it. Pension obligations, initially incurred as a cheap alternative to pay raises for public workers, are increasingly driving state budgets over the brink.
State and local governments and school boards are hostages to the public employee labor unions that control their finances through their contracts and their politics with their donations and votes. These nominally democratic government bodies are as much under the sway of their union captors as the auto companies are of the UAW.
When a Republican Congress turns off the spigot of federal bailouts, the municipal and state bond markets are going to take the hint and stop buying state paper at any interest rate. California will find its debt has become unmarketable and will come begging Congress for relief. First it will seek federal money and then its demands will escalate into a federal guarantee of its state debt.
The Greek financial crisis will come to our shores in the form of state bankruptcies.
Hopefully, Republicans will not be so weak-kneed as they are in the face of the current shortfall and next week's demand for aid. With two Senators caving in, the Democrats were able to pass their aid bill and send it to the House next week.
The Republican solution to state financial distress should be simple: The Party should insist on a change in the federal bankruptcy law providing for a procedure for state bankruptcy (none now exists). This process must call for abrogation of all state and local public employee union contracts as is usually done in private sector bankruptcies. By freeing states and local governments (including school boards) of their union obligations on wages, work rules, staffing, and pensions, they have a chance to survive and, indeed, to prosper. But merely subsidizing these massive expenditures just prolongs the misery of the states in question.
The collapse of overspending state governments must trigger the diminution of the power unions hold over their budgets and their politics. Their coming bankruptcies offer an opportunity for reform and the Republican Congress - backed by newly elected Republican state governments - give us precisely the opportunity we need to effectuate it.
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Catastrophe? The best thing that could happen is that the States of CA, NY, and MA go bust.
Merge with red states in a hostile take over and be saved once and for all!
While we’re at it, how about combining several northeast states into one? They are over-represented in the Senate.
Add Illinois to that list.
A month ago, billions in debt and not paying it’s bills, the Gov. of this once-great state gave his personal staff raises of up to 25%. The three scariest words in Illinois history:
“Governor Pat Quinn”.
Blow it up and start over.
Conservatives should take advantage of the crisis by using the fed gov against the liberal states. Once GOP takes over Congress then start setting conditions for bailouts. For starters, end sanctuary cities and help feds id illegal immigrants and deport them like AZ; second let feds send in an independent audit team to look over state spending and make recommendations, the states must abide by the recommended changes as precondition for fed bailout money. There are so many cost cutting conservative policies can be implemented in cash strap liberal states. AND DON’T GET CONSERVATIVE PC ABOUT USING FED POWER WHEN OUR PARTY/FRACTION GETS THE POWER BECAUSE THE LIBERALS ALREADY DEMONSTRATED THEIR WILLINGNESS TO DO IT!!!!!! Atleast our policies will have the popular support of the people.
Why do I have very little faith the republicans will hold strong?
Well, I am thinking too many RINOs.
If the GOP succumbs to bailouts for the states, they will be over.
Because too few Republican politicians are concerned conservatives thinking beyond themselves.
“While we’re at it, how about combining several northeast states into one? They are over-represented in the Senate.”
Call it Northeasternstan
A brilliant and radical idea, changing the law so States could declare bankruptcy. However, of course, the unions and Obama would go to the mattresses to prevent such a law from being passed. They are more than willing for utter catastrophe at the State level than to surrender a thin dime of their egregiously bloated benefits and pensions.
Yep, this depression is a slow-motion disaster. We learned from the last great depression, sort of, so there are all sorts of stopgap measures to reduce the impact of bad financial decision-making up and down the line. The last time it was like a flooding river, sweeping the land. This time, we have levees, some of which are holding, some of which are leaking, and some of which have already collapsed, but even in those situations, there are pumps trying to get rid of the water. Sadly, it looks like the same sort of stupid decisions made during the last disaster are being repeated here.
Housing, financial institutions, banks, credit, debt, pensions.... and a lazy, fat bureaucracy trying to hold the whole system together. I’d be looking for higher ground, or a boat.
IMHO, the pubbies should spend time (I hope they are all ready spending time) figuring out they can defund all the Marxist garbage nobama has gotten passed.
The pubbies, unfortunately, won’t have a chance in hell of overriding nobama vetoes, so I reckon defunding will have to do.
“State and local governments and school boards are hostages to the public employee labor unions that control their finances through their contracts...”
Wrong. Pure, unmitigated liberal propaganda. (I’m surprised by the number of conservatives who swallow the liberal contract line.)
Legislatures are NOT bound by the actions of previous legislatures. It’s why we have elections - to change directions of previous legislatures. And judges can’t do squat about it. If judges try, they can be impeached and removed. Clearly, legislatures hold all the cards.
Contracts made by legislatures are NOT inviolate.
Congress needs to set the example for the state governments by putting the unions it deals with on notice that things are going to change. Each of us in the private sector has made sacrifices and the unions should start pulling their own weight. My brothers all belong to unions and most do not like the union being involved with politics. Contributing millions of union dues to any political party is frowned upon and considered a waste that only benefits the union leadership.
The last sentence in the article was unnecessary.
The federal government threw “stimulus” money at California pushing off the day of reckoning but the federal government cannot continue filling the shortfall indefinitely.
The only real question is will it be a controlled bankruptcy or a out of control crash.
With the current idiots in power, it looks like a crash is on its way.
I did not add Illinois to the list because I felt that CA, NY, and MA are pretty much homogeneously liberal, while IL is only liberal in Chicago. Of course, it controls the State, but as long as we’re only talking about making an example of certain States, I would choose just those 3, and hope that the rest learn their lesson.
Receivership. Let the conservative voters in other states take charge of those states, and tell the CA, NY, and MA voters that as soon as they are back in sound fiscal hands, we’ll let them take another shot at self-government.
But you know that the Libs will not be trumped when it comes to power grabs. Like the article says. Change the state bankrupcy law to include re-negotiating union contracts.
However, that allows the state houses to wash their hands of strong disinfectant cleaner that the Repub majority of the US House would splash on the state budgets. The state legislatures would just say "mean, evil, cruel, cold, republicans" while giggling that "daddy" bailed them out. Then they would turn around and vote for more and more budget busting legislation. Like a cycle of dependency and co-dependency. Lucy-Charlie Brown-football.
NO! Dangit No! I believe that the Repubs should just say no. For instance, in California let the daggone legislature make the tough decisions. The Libs in Calif know EXACTLY what needs to be done but not a one of them have the guts to do it. They got themselves there; let them get themselves out. Outside of earthquakes, floods and wildfires, let them fend for themselves. If the want to be a sovereign state, then By God, act like it.
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