Posted on 01/26/2011 5:14:55 AM PST by Kaslin
When state governments -- facing intractable budget problems -- come to the Republican House asking for more bailout money, most GOP congressmen are determined to speak with one voice and say "no." But where will the "no" leave the states and their citizens? Can they fix their fiscal woes by their own efforts?
They can raise taxes, of course, and set their states on a death spiral akin to that which has already destroyed Detroit and much of upstate New York. Or they can cut spending, slicing the heart out of vital services like education and police protection. Cuts of this magnitude will almost destroy the education of a large part of this generation of students.
There is a third way: to get to the root of the reasons for their dire crisis in the first place and abrogate their collective bargaining agreements with municipal unions that have brought them to this condition.
States cannot do so on their own. They need the federal government to adopt a bankruptcy procedure to allow them to do it. States are constitutionally bound to honor contracts, so it is only through a federal bankruptcy court that they can be released from the ill-considered and overly generous agreements that bind them.
In bankruptcy, municipal bondholders will -- and must -- be protected. But the bankruptcy court can offer states the option of renegotiating their union agreements to avoid raising taxes or eviscerating their schools. (States would not be forced into bankruptcy, but would enter it voluntarily, seeking the protection of Chapter 9.)
Even if the states had the legal means to get out of their union contracts without federal intervention, they could not do so politically. Union political power is too entrenched to be dislodged even by a determined governor and state legislature.
Don't count on the unions to act responsibly unless they are forced by a bankruptcy court to do so. Look at Detroit. The teachers union is perfectly willing to let the city swoon into a death spiral -- led by its public schools -- rather than concede any of its pay, benefits, pensions and work rules won at the bargaining table.
The city has closed half of its schools and will soon close two-thirds. Class size in high school will average 62 children. But the teachers will get every dime of their bonuses, pay and pensions. The union will even continue to control health insurance, providing it to its members at a markup one-third above that of private health insurance -- paid by the taxpayer.
If the Republicans in the House just say no, Obama will use their refusal to pit them against the schoolchildren of America. He will frame the issue as Republican penury vs. the needs of our schools. And no speeches about profligate state spending will make any difference.
But if the GOP posits the alternative of a bankruptcy procedure for states, it will inject a third option -- reform. Then, if Obama demands a cash bailout and states resist the bankruptcy option, they will have forced the curtailment of state services -- not the Republican House. They will have demonstrated, conclusively, that they value the needs of their union overlords more than those of their constituents.
Finally, the Republican House should pass a state bankruptcy bill to break the political power of the unions and undermine the labor-Democratic Party coalition that does so much to animate and fund their congressional candidates. AFSME, SEIU, AFT and NEA -- the Four Horsemen of the Apocalypse -- spent a combined $200 million on politics in the last cycle.
Pass a state bankruptcy law and abrogate their contracts, and you destroy both their monopoly and their power -- and, along with it, much of the financial base of the Democratic Party.
When GM went bankrupt, were the bond-holders protected?
If State’s bankruptcy ever seems like it makes sense, reflect for a moment on who will divide the spoils.
Oh come on, “Education” and police services aren’t the place to start. Get rid of the programs that aren’t part and parcel of a state’s constitutional obligations.
And besides, why talk about “programs” first? Start with employment, benefits, raises, pensions. Cut marginal performers and under performers first. Who would miss them. Cut or freeze benefits and compensation, especially pensions. Tough toenails if it “hurts” some government employees. They’ve enjoyed way too much compensation/benefits vis a vis their private counterparts, and way too much job security as well. Time to shake the trees.
I would say that allowing a state to absolve itself of debt is too much of a tyranny.
The executive branch can dissolve a union. If they do not want to do that, they can force more concessions in court by demonstrating that the unions are not bargaining “in good faith”, just like the unions do to them.
Complete BS article, presuming that the current massive spending is all necessary.
The citizens of those states (and this country) have collectively chosen poorly and now must deal with their failure.
States like California should be forced (allowed) to resolve their own problems. Some will foolishly do anything they can to maintain spending and enter into a death spiral, others will cut spending and in doing so provide an example for others.
And the citizens of the states that have chosen wisely will reap the rewards either way.
There's the rub. In the GM bankruptcy many bond holders saw their life savings wiped out when the Court blatantly violated the law and gave their assets to the Unions thus rewarding the greed of the very institution which drove GM into Bankruptcy in the first place. Anyone think allowing State's into Bky court would be much different.
Yes, it is.
Defund collectives. The laboratories of democracy have become the stomping gounds for collectivists/socialists/totalitarians and any other labe you want to stick on anti-individual gangs.
Only Goldman Sachs and JP Morgan are protected against BK - everyone else is on their own.
The monster is so bloated it cannot stand upright by itself anymore....lets start with schools..
when did the local school become a restaurant???Feeding breakfast and lunch to school kiddies on the government dime? All meticulously and lovingly hand prepared by government (union) officals....close the kitchens, layoff all kitchen workers, and tell mommy or daddy to drag their butts out of bed, cook breakfast and pack lunch for their kids.....enormous savings right there....
when did the school have to hire limosine services for the kiddies? Privitize this crap right now, and save tons of cash......
most large corporations oursource janitorial services...why not schools???
how many adminsitrators does it take to run an elementary school....back in my day a principal, vice principal and 2 secretaries did the job....now you have 3 times this many people.....
tons of savings right here without even going into teachers salary...that could be step 2
Dick Morris sounds like the Big Government guy he has always been.
We need to force the politicians to cut expenses and if the politicians start playing games as to which expenses are cut, then the voters need to clean house and put in a new slate of officers who will do the job right.
The scorecard now reads Morris and Gingrich as big advocates of big government. Who else is going to join the “shunned by conservatives” list?:
-——back in my day a principal, vice principal and 2 secretaries did the job-——
You misunderstand the system. The system exists to pay educators, not to educate children.
Children are merely cannon fodder
America has no education system, it has an educator system
I was going to post what you posted, almost word for word. Thanks for saving me the trouble. It is, indeed, BS.
“”The system exists to pay educators, not to educate children. Children are merely cannon fodder. America has no education system, it has an educator system””
Thanks for the reminder regarding the US school system.
bankruptcy is meaningless for a state.
they can simply renounce their debt.
nobody can do anything to the state.
However, it does seem that when it goes to the courts, the union members usually make out better than nameless investors holding bonds.
State bankruptcy throws off the shackles for demanding responsible fiscal behavior for the states. Just as many individuals will be irresponsible, so will states - already California and Illinois, along with others, have been irresponsible without a promise of bankruptcy. And think about the Federal government mandates to the states where Federal spending can be off-loaded down to the state level and eliminated like a flush of the toilet through state bankruptcy.
Finally, worst of all, this is another ruse whereby wealth can be redistributed to Federal liking. Think of all the pension funds and investors in GM who lost money when the Federal government swiped their equity and gave it to the UAW and the US government. The same kind of entities, companies and individuals invest in obligations of states as well. Bankrupcy courts could just cancel those obligations and transfer that wealth back to the states, or holders of state obligations that those in power like better.
State bankrupty is not just a horrible and atrocious idea, it is raw evil at work.
Or, you know, the states could sell off assets!
Why are we discussing the bankruptcy of states when those states own a lot of property that could be sold before they have nothing left?
More of the idiotic group-think from the usual suspects.
People tend to get the government they deserve.
Give me a break. Nanny government won't be able to pay for it, so you'll go through life ignorant and uneducated?
Given the state of education institutions in this country, this option might not be all that bad.
Give me a break. Nanny government won't be able to pay for it, so you'll go through life ignorant and uneducated?
Given the state of education institutions in this country, this option might not be all that bad.
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