Posted on 08/10/2010 3:01:55 AM PDT by Scanian
Federal Band-Aids won't cover the fiscal problems of such states as New York, California, Michigan and Connecticut forever. State bankruptcy and fundamental restructuring of state and local finance -- and labor relations -- is at hand.
Take Connecticut. In the current fiscal year, $2 billion in federal subsidies have helped tide it over the recession -- a hefty share of its $15 billion budget. But these infusions are one-shot grants, renewed only if Congress acts affirmatively to do so. Other states depend on similar manifestations of federal largess.
In Washington, the House is set to pass a $26 billion aid package this week -- fresh federal aid amounting to about 2 percent of state and local spending. But if the Republicans win control of Congress this fall, it is hard to see any legislative willingness to renew these subsidies.
Instead, GOP lawmakers will point to the examples of New Jersey, Virginia and Indiana -- where conservative governors have slashed spending to avoid tax hikes. In Virginia, Gov. Bob McDonnell has reduced spending to pre-2006 levels.
If Congress fails to renew its subsidies, the more profligate states will face cash shortfalls in the current fiscal year. They'll threaten school closures, prison releases and all manner of mayhem if their subsidies aren't renewed. But the Republicans in Washington are likely to refuse -- asking why the responsible states should bail out the spendthrifts in Albany, Sacramento, Lansing and Hartford.
At that point, the bond markets will start eyeing state (and local) balance sheets more critically -- demanding higher rates or even refusing to lend. California won't be the only one trying to get by on IOUs.
(Excerpt) Read more at nypost.com ...
Doesn't have to.
Only has to "cover their fiscal problems" until the current crop of politicians can secure their fat federal pensions. Then the whole excrement-pile can blow excrement-high, for all they care. Get serious Dick.
Let ‘em burn.
So shove it, Barky!
Let 'em fail.
Bankrupcy serves an important purpose. It compensates the creditors to the extent possible and eliminates the agreements that lead to the failure in the first place. This is a good process that should be permitted to move forward. Subsidizing failure just guarantees more failure.
Right now, the only reason anybody lends to New York or California is because they think the legislatures will just tax people at ever higher rates forever, and the gravy train will never reach the end of the line. This should be a bad bet, and the people who cynically made it should lose their money.
Federal taxes and regulation are ruining state and local economies, and now the House Democrats want to pretend to be nice, garbage, don’t no one should buy it. See it for what it is.
The real question to ask here...if this spiral continues and they return in seven months for more...then what? I’d like for each congressman and senator favoring this...to explain how it’ll work the second or third time around.
So shove it, Barky!
Actually, Mr. Soebarkah ...
http://www.freerepublic.com/focus/f-bloggers/2565896/posts
Amen!
I’m in Michigan and have been saying it all along.
I don’t want any filthy stolen money. I want to keep my own and decide what to do with it.
NJ Governor Christie is considering not taking any further bailout money.
There will be an outcry from the teechurs but this is something that must be done. This crisis is far from over and if we don’t get spending under control we will be Greece.
All the more so since in 1986, when Texas was on the skids due to the bottom dropping out of the oil market, the response from the rest of the country was “F**k ‘em.” Texas got no help.
Well, you know what? Texas decided that they never again wanted to be in the position of depending on just one major industry, so the state has made an enormous effort to diversify industries and business in the state - so now the Texas economy keeps rolling even if one sector gets hammered. Today, Texas is an telecom and electronics capital, a huge manufacturing base, a major banking center, a shipping/distributing hub, a major medical R&D/treatement capital and more. Pulled ourselves up by our bootstraps, we did.
To the other states, I give the same answer we were given: F**k ‘em, let ‘em burn.
All the Obama Democrats did was charge the state's Visa bill to the taxpayers Master Card.
The bulk of the Fed “Stimulus” spending went to bail out local and state Governments. The Dems theory was the economy will recover and local tax revenues will come back up before the “Stimulus” spending was exhausted thus preventing any mass layoffs in their Government Employee Union political base.
Now they are running out of Stimulus money, the economy isn't recovering and the state and local budgets still have all the fat in them they had pre Recession
California, Michigan, New York and Connecticut are net Federal tax producing states. If Connecticut goes bust they are going to start questioning why they are losing $3000 per capita to underwrite the people of Alabama and South Dakota and Tennessee. A tax revolt in New Mexico or Mississippi is meaningless. They get more than they give. A tax revolt in Michigan is what we are looking for. They have been carrying the Federal load for generations.
If the dollars stop flowing, a lot of red states are going to hurt. That is the price of killing the leviathan. We are going to have to stand up and compete. Some states will make it, some won’t.
It’s coming and it’s coming fast.
Mississippi will survive... Michigan... been doing poory for decades. “A country boy can survive”.
LLS
If the poorer states didn’t have to offer so many Federally-mandated-yet-unfunded services, they might not be so bad off, for starters. And the richer states would be better off as well.
There are a number of things that they can do to mitigate the damage but will they? I doubt it.
The .com and subprime bubbles are mouse nuts compared to the massive government bubble.
Won't happen.
States have unions, too! : (
You still have 200 billion dollars a year - a trillion dollars every five - flowing out of the rich states and into the poorer ones. Cut that off - and we should and will - it will be a dog-eat-dog scramble. We will be better off for doing it but don’t minimize the initial pain.
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