Posted on 06/27/2017 8:54:37 AM PDT by Kaslin
If Gov. Bruce Rauner and his legislature in Springfield do not put a budget together by Friday, the Land of Lincoln will be the first state in the Union to see its debt plunge into junk-bond status.
Illinois has $14.5 billion in overdue bills, $130 billion in unfunded pension obligations, and no budget. "We can't manage our money," says Rauner. "We're like a banana republic."
Speaking of banana republics, Puerto Rico, which owes $74 billion to creditors who hold its tax-exempt bonds, and $40 billion in unfunded pension liabilities, has already entered bankruptcy proceedings.
The island's imaginative 38-year-old governor, Ricardo Rossello, however, has a solution. Call Uncle Sam. On June 11, Rossello held a plebiscite, with a 23 percent turnout, that voted 97 percent to make Puerto Rico our 51st state.
"(T)he federal government will no longer be able to ignore the voice of the majority of the American citizens in Puerto Rico," said Rossello. Washington cannot "demand democracy in other parts of the world, and not respond to the legitimate right to self-determination that was exercised today in the American territory of Puerto Rico."
Had the governor been talking about the island's right to become free and independent, he would have had a point. But statehood inside the USA is something Uncle Sam decides.
Rossello calls to mind Count Mountjoy of Grand Fenwick, who, in "The Mouse that Roared," plotted to rescue his bankrupt duchy by declaring war on the U.S., sailing to America to surrender, and then demanding the foreign aid America bestows on defeated enemies.
Yet Puerto Rico's defaults on its debts may soon be our problem. Many bond funds in which Americans have invested their savings and retirement money are full of Puerto Rican bonds.
According to The New York Times, the U.S. Virgin Islands, the Northern Marianas and Guam are in the same boat. With 100,000 people, the Virgin Islands owe $6.5 billion to pensioners and creditors.
Then there is Connecticut, a state that has long ranked in the top tier in per capita income and wealth.
Connecticut, too, appears wobbly. Rising pension benefits, the cost of servicing the state debt and falling tax revenue due to fleeing residents and companies like Aetna and General Electric, have dropped Connecticut to near the national bottom in growth prospects.
"The state's population is falling: Its net domestic out-migration was nearly 30,000 from 2015 to 2016. In 2016, it lost slightly more than 8,000 people, leaving its population at 3.6 million," reports Fox News: "(R)ecent national moving company surveys (show) more people leaving Connecticut than moving in. In 2016, the state also saw a population decline for the third consecutive year."
As its example of a welfare state going belly up, the EU offers us Greece. And questions arise from all of these examples. Is this an inexorable trend? Has the old New Deal formula of "tax and tax, spend and spend, and elect and elect" finally run its course?
Across the West, social welfare states are threatened by falling revenues, taxpayer flight, rising debt as a share of GDP, sinking bond ratings and proliferating defaults.
Record high social welfare spending is among the reasons that Western nations skimp on defense. Even the Americans, who spent 9 percent of GDP on defense under President Kennedy and 6 percent under President Reagan, are now well below that, though U.S. security commitments are as great as they were in the Cold War.
Among NATO nations, the U.S. is among the least socialist, with less than 40 percent of GDP consumed by government at all levels. France, with 57 percent of GDP siphoned off, is at the opposite pole.
Yet even here in America we no longer grow at 4 percent a year, or even 3 percent. We seem to be nearing a point of government consumption beyond the capacity of the private sector to provide the necessary funds.
Some Democrats are discovering there are limits to how much the government can consume of the nation's wealth without adversely affecting their own fortunes. And in the Obamacare debate this week, Republicans are running head-on into the reality that clawing back social welfare benefits already voted may be political suicide.
Has democratic socialism passed its apogee?
Native-born populations in the West are aging, shrinking and dying, not reproducing themselves. The cost of pensions and health care for the elderly is inexorably going up. Immigration into the West, almost entirely from the Third World, is bringing in peoples who, on balance, take more in social welfare than they pay in taxes.
Deficits and national debts as a share of GDP are rising. Almost nowhere does one see the old robust growth rates returning. And the infrastructure of the West -- roads, bridges, tunnels, ports, airports, subways, train tracks -- continues to crumble for lack of investment.
The days of interstate highway systems and moon shots seem to be behind us. Are Puerto Rico and Illinois the harbingers of what is to come?
Freedom to exit: Yes
Power to demand the U.S. fund a bail out: No
Come to us when you’re solvent.
Come to us when you support the concept of a Republic and not that a Socialist Workers Paradise.
Sadly yes, unless we see fundamental change, Illinois and Puerto Rico are our future. I’ve heard California isn’t far behind.
They are the future ... for Illinois and Puerto Rico. California and NYS may soon follow. But why should the general American taxpayer be asked to bail out these spendthrift entities?
I want to see federal law(s) that prevent fiscally sound states (like most) from the bleeding of the Illinois, Calif, Conn. idiots.
We will NOT be robbed to pay for Peter cause Peter overspent like crazy.
Yep if they are so big on self determination and all that, let us see Puerto Rico become an independent country.
Illinois could save a lot of money and cut the deficit substantially by releasing the politicians from its jails.
Parole them to Indiana.
Just look at the numbers here. Only 31% of Federal expenditures in 2016 (Defense + Discretionary) could be considered productive or useful expenditures in any way -- and that assumes there is no waste in any of those programs (highly unlikely).
California is coming along, too.
They have over $250 billion in unfunded pension liabilities for state workers.
They want to spend $100 billion or more on their Delta Tunnels project to send more water to Southern California.
They’re on a ruinous path committing themselves to an ill-fated high speed rail project whose various phases all combine into an obscene $500 billion scheme.
And they’re busy chasing away employers and taxpayers in favor of the homeless, the unemployed, and illegal aliens.
Give it a generation and California won’t even be the envy of Detroit.
Works for me...
I’m not interested in a territory that is predominantly Spanish speaking, and wants to live in the fantasy land of socialism. We’re trying to dig ourselves out of that right now.
We would be buying into a big mistake. Of course this means our leaders probably won’t be able to resist.
If ILLINOIS wants to rise from the bottom of the pit, it would be prudent for GOV. RAUNER to veto HB 40 (taxpayer funded abortions for government workers and those on Medicare), HB 1785 (transgender birth certificate bill), and rescind the recent Illinois DCFS policy that forces the acceptance of the lesbian, gay, bisexual, transgender and queer/questioning (LGBTQ) lifestyle upon ALL social workers and foster families.
GOD will not be mocked.
Lord help us if they are.
It depends on who you ask . . . for example:
Donald Trump (hint: does it make economic or financial sense?)
Barack O’butthead (how many votes could be gained)
Yes. Greece is our future too. Its the future of every Welfare State when it runs out of OPM.
Well it’s not a new idea either. I remember President Ford wanted to make PR a state. And the first George Bush called for he people of PR to determine their future and supported statehood if the people chose that option.
The recent election had such low voter turnout it’s hard to say that election really represents the choice of PR residents to be a state. Then again even if they vote for it Congress still would have to vote on it.
I hate to see PR becime a state just to get a federal bail out of their financial problems.
The best thing for our relationship with Puerto Rico is a negotiated independence for the island. We negotiate the permanent use of Fort Buchanan and other military bases on the island in return for Puerto Rico's independence. Then the Puerto Ricans can sink or swim on their own as they best see fit (which also means an end to open immigration from the island).
As to the mini Kinshasas and San Salvadors embedded within our own major cities, I'm afraid we're stuck with those.
if you allow liberal democrats to obtain a veto-proof majority, yes. THankfully that is not the case in most places. But states like IL where urban centers can out-vote the rural areas - - beware.
That is a very lowball estimate.
Public employee pensions should have always been defined contribution and never defined payout.
Public employees should be subject to the same market fluctuations as private sector employees that rely on IRAs and 401Ks for their retirement.
Quick solution is to make all federal elected officials dependent on only Social Security, IRAs, and 401Ks for their retirement, Obamacare for their medical needs, and subject to insider trading laws like everyone else.
That seems like the best policy to me.
I do think we need to take a hard look at who we have allowed to come into our nation.
I’m sorry, but some folks don’t belong here.
As nasty as it would seem, some of them need to be drop-kicked back home.
There should be a reasoned “cause”, but it should happen for some.
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