Posted on 12/27/2010 9:53:02 AM PST by mojito
The nation's menu of crises caused by governmental malpractice may soon include states coming to Congress as mendicants, seeking relief from the consequences of their choices. Congress should forestall this by passing a bill with a bland title but explosive potential.
Principal author of the Public Employee Pension Transparency Act is Rep. Devin Nunes, a Republican from California, where about 80 cents of every government dollar goes for government employees' pay and benefits. His bill would define the scale of the problem of underfunded state and local government pensions and would notify states not to approach Congress like Oliver Twists, holding out porridge bowls and asking for more.
(Excerpt) Read more at washingtonpost.com ...
The broke states, including mine (IL), need to declare bankruptcy including a complete redo of all public employee unions, their pay and benefits. Then they need a balanced budget amendment.
No bankruptcy - no reform -no balanced budget - no bailout.
The House must stand against bailing out any states. The message is not complicated: they made their mess, they should clean it up.
The House will also have to take on the Fed, which will try to bail out certain states by buying up their municipal bonds. At the merest hint of this, the House should drag that sleaze Bernanke in for hearings and make an absolute spectacle of it...shine the light on it so the American people will irrevocably tie the bailouts to Obama, so Obama will put pressure on Bernanke. There may have to be some theater involved in order to come up with something to catapult it onto all the lead stories on television, online and in print.
It is time for those living in liberal states (and I sadly live in one) to take their medicine.
Can states do that?
(I live in Illinois too.)
This is outrageous. And this is part of our overall problem. By laundering money through Washington, state politicians avoid the political price for high taxes. Consider those stories that you read about federal funds going for bike paths or museums of local historic interest. Does it occur to anyone but us Tea Party types that these things should be paid for with local funds?
I mean, if the citizens of Podunk, East Dakota don't want to pay for a jackelope museum, why should taxpayers in West Carolina have to chip in money for it?
Chapter 9 is not available to States.
No. And even if they could in the case of Illinois it wouldn't matter as these 'contractual obligations' are enshrined in the Illinois State Constitution.
Technically, no they cannot.
However, municipalities can so if all the municipalities in a state agree to accept bankruptcy, the effect is the same, except on the state government itself.
My point is that no state should receive a penny to bail them out without a solid reform plan in place.
You need to read the Illinois State Constitution Article 13, Section 5.
Here it is in all it's awful glory:
Section 5. Pension and Retirement Rights Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
We are so screwed. I'm out of this God-forsaken State in 2 years.
Yes, that’s the law for EXISTING contracts, not future contracts or renewals. I refer to future contracts, renewals and the future of the unions.
It really doesn’t matter where you go. The end result of the state’s mess will be all taxpayers footing the bill. It will happen - count on it.
My point is that we do not HAVE to bail out the states and we CAN set conditions, even if we have to insist states amend their constitutions to allow renegotiation. Keep in mind we cannot mandate, but we sure as hell can set tough conditions without exception.
L
They’ve no choice left and that is the tragedy of the Left.
Quinn is proposing to raise all property taxes 100%, another 1% on the sales tax and increasing taxes on tobacco and gasoline.
Problem is: even that’s not enough and we’ll have foreclosures galore as most can’t pay their property taxes on time NOW.
Sooner or later, they all run out of other people’s money. Then it’s time to pay the piper.
I wish this were written as "TEA Party (Taxed Enough Already)" every time. Maybe then people would learn what it means. It would get the point across as well as stopping the accusing of members of the TEA Party movement of extraneous things.
Sadly, this will be the ONLY part of ANY Constitution that Statists in gubbamint actually faithfully abide by.
Sure they do. They'll just tip the table and walk away blaming the mess on the 'intransigent' Illinois Republicans.
And I'll remind you, these are just the current, not future obligations we're talking about. So they are most definetely covered under the IL Consitution.
Quinn is proposing to raise all property taxes 100%,
That'll have even the most brain dead Chicago bungalow owners out in the streets with pitchforks and torches. Gas is already 3.25 a gallon in the 'burbs. It must be over 3.50 in the City.
It won't be anything as orderly as a Bankruptcy for Illinois I'm afraid. It's going to be default. Once those buyers of 'safe' muni bonds realize that their hard earned money is going directly to LINK EBT cards and that they'll likely never be repaid, all bets are off.
That's when you'll see the west and south sides of Chicago go up in flames as well as East St. Louis and Cairo.
Personally I can't wait for it.
so if nothing else happens, the wheels of the state bus would come off in the form of no state paychecks and no state checks for utilities, interest, pension benefits, medical benefits, and so on.
the fire, police, prison guards, and educators would become unpaid volunteers if they stayed, and otherwise they could walk off the job and seek employment in the private sector.
the state court system would cease to function. prisoners would remain in prison voluntarily, or else leave (it would be inhumane to lock someone up without food, water, or medical treatment).
all that is so unthinkable that i would imagine all the state legislators— republicans and democrats— would feel pressure from the masses to clamor for a quick fix to let the fed buy state bonds to bridge them for a while.
if there were any decency left in politics, the request would come hand in hand with an admission of institutional complicity in the entire economic quagmire. given no legal precedent, all parties to a solution would sit at a round table and hammer out a new set of contracts, mediated by a retired judge or three.
most of this would be negotiated behind the scenes... in the big three bankrupt states, that would mean the controlling democrat legislatures would send feelers to bernanke through obama using backchannels. the need for decency is obviated by the use of the secret backchannels. the solution would be heavily tilted in favor of the unions so when it is announced, the damage to unions would be minimized. the minority republicans would get dragged along behind the bus. given that the unions have a seat at the backroom table, the deal would probably consist of maximum concessions to unions and maximum discomfort for everyone else— small businesses, retirees, contractors.
the unruly welfare masses would be along for the ride because they are the ones who obama needs to control in order to sell the deal to the public at large— they would be the shotgun to the head of the american people.
at the federal level, i am not certain what if anything the House Republicans could do to stop such a deal. i am presuming that obama and bernanke are joined at the hip, but I think this is a safe assumption given their histories.
cynically, the solution would be announced about a month before the 2012 presidential elections. it would be designed such that any negotiation delay would result in the threat of imminent rioting in the streets of the big three states. that would give obama maximum political turbo boost for re-election. never let a crisis go to waste.
non-big-three states would be dragged behind the bus along with republicans.
this would be a fundamental political shift of power from state governments to federal government. basically, states would become figurehead bureaucracies. removing the moral hazard of bankruptcy for only the big three states won’t work— it’s all or none. with the state checks and balances demonstrably removed, unions in the remaining states will demand their share of the pie to maintain fairness and equity. the republicans in those states will cave. with fed printing paper money to cover all costs, inflation will begin to shoot through the roof. cynically, this will run until to next election, with both parties pointing fingers at each other.
basically it amounts to an extended game of political chicken with the national civil order and economy as hostage. not good.
we can probably use Argentina as a medium term model for what to expect in the USA for the next generation or two.
USA the Next Argentina - Peter Schiff (youtube)
http://www.youtube.com/watch?v=CTcNVM5f4AA
In Illinois? Highly doubtful.
As for the rest of your scenario? I can see them try to backdoor something from the Fed tilted to favor the unions and government employees. I also think that people are getting pretty well fed up with Obama's antics. I seriously doubt that Barney and Betty Bungalow are going to sit still for a massive tax hit to fund a bunch of Government featherbedders.
I also think that this time, maybe, just maybe, the Republicans have gotten the message. Maybe. I don't see the Jim DeMints of this world standing still for this. Any of this would have to originate in the House, at least that which isn't simply done by Bernanke fiat anyway.
removing the moral hazard of bankruptcy for only the big three states won’t work— it’s all or none. with the state checks and balances demonstrably removed,
I don't see Texas, Montana, Utah, Wyoming, et all going along with that at all. You'll here the word 'secession' mentioned and it won't be by the crazies. It'll come from State Legislatures.
I suspect it would not do you or any of the rest of us much good to go from one state to another, given the sheer size of the coming economic tsunami. It will not recognize state sovereignty or state boundaries. It is the irresistible force.
People who are being tasked with providing potential solutions for cleaning up this mess are probably considering radical solutions as we type.
Perhaps we should not humor ourselves that the bankers and politicians do not know about the individual solution of moving away from economically unhealthy states into economically healthy states.
Taxes Trigger a Texodus in New York
http://www.freerepublic.com/focus/f-news/2648033/posts
The bankers and politicians are probably seeing wholesale migrations of people, corporations and capital away from heavy tax blue states towards low tax bracket red states, and salivating. The only thing standing in their way is state sovereignty. The only thing they need is a big national crisis, or the imminent threat of one, to get rid of state sovereignty.
So one possible outcome is that this economic crisis is “not wasted” in the Rahm Emmanuel sense by reoganizing the states into districts along the lines of the Federal Reserve Districts.
Illinois belongs to FR District 7. So Illinois as a state would be absorbed into US Federal District 7 along with Iowa, Wisconsin, Michigan, and either all or none of Indiana. Maybe Indiana would go into a US Federal District 8 since the other half is in FR District 8.
Basically the end game is not the actual end if it can be disguised by the politicians via making it into a gigantic shell game. In this scenario, state sovereignty checks and balances will be given away in backroom deals with union reps at the table (California/Illinois/New York politics will infest and take over national politics).
The discussions at the Federal Reserve Board level must be very interesting these days.
/speculation
Sinclair Lewis.
L
But the unions won't permit Obama and his kind to give up pursuit of these renegade states and their shiny, shiny positive state balance sheets. Wow... what a vision, Obama as the Anti-Lincoln. I wonder what next, an underground railroad for middle class white folks running from Chicago to San Antonio?
Realistically, even the healthiest states are slated to go broke given their unfunded pension obligations. So Rahm-types can enable the Obama-types and Bernanke-types by using the argument that resistance is futile... given that we're all infected, even at the state level.
(Yes, even Alaska. though Alaska is in better shape than many. Maybe another reason Palin is getting so much heat at this time in the media.)
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