The Smart Politics of Refusing State Bailouts

The American Thinker ^ | November 16, 2010 | J. Robert Smith

[Scanian]

The old saying goes that good policy makes for good politics. In the case of Washington bailing out spendthrift states, the best policy is for the incoming Republican U.S. House to refuse to give the likes of California or New York a penny. A steadfast "No Bailouts" policy makes for better -- and, perhaps, profoundly transformational -- politics.

Unless voter behavior changes, the policies and practices that are leading overleveraged states to default -- or worse -- won't change. Reform in voter thinking and, consequently, in how voters touch screens in state elections is critical to ending the era of irresponsible big government on the state level (and eventually ending it in Washington, too). Critical to this formula is compelling voters to hold state elected officials strictly accountable for their actions, or lack thereof.

No bailouts means that state politicians -- mostly Democrats, but a fair share of Republicans -- are going to have to explain the folly of featherbedding public employee and teacher pensions, runaway spending, and big government, all which are leading more than a few states to the bleak land of default. And make no mistake, state defaults are in the offing, with the tarnished Golden State and diminished Empire State of New York on the inside track.

California and New York, conspicuous by their size, prominence, the magnitude of their looming failures, are the best examples of how a conservative-dominated U.S. House can force a significant and positive change in the political dynamics of profligate states. Without changes in the politics and polices of California and New York, the stage is set for an open-ended cycle of default and Washington bailouts (or federal bailouts until the national government confronts its own ruin).

Let's face it. California and New York are hard cases, as jail wardens might say. The electorates in both states are lopsidedly Democratic. Californians and New Yorkers have a taste for the liberal.

Case in point, on Election Day, Californians and New Yorkers, in nostalgic moods, deposited the once-outcast Jerry Brown in the Governor's office in Sacramento, and elected Andrew Cuomo (Mario's reincarnation) to the helm in Albany. The plain truth is that voters weren't hoodwinked by either Brown or Cuomo. By both men's elections, Californians and New Yorkers were giving clear mandates for business as usual; meaning, spend, spend, spend. Borrow, borrow, borrow. Tax, tax, tax.

Of course, Brown and Cuomo on the stump made feints at fiscal responsibility - you know, snip state spending here, trim a little there. But both men are career liberal Democratic politicians; at their cores, they believe deeply in big government. Brown and Cuomo have reputations, careers, and incomes riding on liberalism. Genuine apostasy - meaning real departures from spend, borrow, and tax -- aren't in either Brown's or Cuomo's playbooks.

Instead, what will happen in California and New York is that Governors Brown and Cuomo, along with Democratic leaders, and some Republican enablers, will make cosmetic cuts to their states' budgets. Both Governors will announce that, despite good faith efforts, their states face budget crises. Both Brown and Cuomo will blame the budget crises not on bad policies and reckless spending and borrowing, but on an ailing national economy. Forces beyond their control will not permit California's and New York's political leaders to get handles on their state budgets. Hence, the need for Brown and Cuomo to go hats-in-hand to Washington.

If Washington caves in and gives bailouts to California and New York, the result will be to let Brown, Cuomo, and their ilk off the hook.

[chuckee]

Let them default and live hand to mouth. Will force their liberal voters to grow up and vote responsibly if that is possible.

[Scanian]

There is no doubt that the expectation of getting bailed out by a Dem president and congress is what helped the likes of Boxer, Brown, Cuomo, and Gilliland get elected in CA and NY last week.

The moochers who dominate the electorates there were looking for an easy way out.

But it might well blow up in their faces.

[November 2010]

Bar the Fed from buying state bonds.

[Scanian]

“Bar the Fed..”

You could have stopped there.

[pnh102]

[GreenHornet]

I realize that Daily News front page in your post is about 35 years old, but I found it interesting that the Dow being down 12 points was considered a “skid” back then.

[Venturer]

I do not believe that we should ba bailing out States, but I also believe we have to stop piling on more debt to these states by federal laws such as health Care, which States will have to pick up the tab for.

[sergeantdave]

During Reconstruction, the southern states were stripped of representation in Washington. We can repeat this tough medicine in NY, CA and other left wing states. When the courts threatened to step in, the Radical Republicans simply told the courts that they can’t rule on Reconstruction acts.

One way or another the leftist traitors and their supporters must be dealt with. The “other” way will be bloody and ruinous.