A Path Is Sought for States to Escape Their Debt Burdens

[Nuclear Unicorn]

Source: New York Times

Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.

Read more: http://www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html

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A necessary evil?

Some states may need it but it seems like it would kill their ability to raise revenue through bonds. It could also be used to weasel out of contracts with employees.

But should other states pay for the bad fiscal policies of other states?

[MannyGoldstein]

1. Part of the war on senior Americans

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x238503

[closeupready]

2. It's ironic that it appears the Texas Republican Cornyn is pushing this idea forward.

Both given the reputation Texas enjoys as being a renegade, and also in light of the fact that Republicans have always been the party of "personal responsibility".

In other words, make sure that you have an option other than raising taxes on the wealthy before considering how to skip out on your obligations to retired pensioners.

[elleng]

3. This 'either/or' must be made clear to the public,

'raising taxes on the wealthy/skip out on your obligations to retired pensioners.'

[HereSince1628]

4. Its an attack on AFSCME, and that union's support for democrats.

Because of gov'ts footprint in the economy, these state bankruptcy plans if inacted would significantly de-leverage all workers expectations for compensation.

[Kolesar]

7. NY Times: Unfunded pensions become unsecured debts in municipal bankruptcy and may be reduced. eom

[Yupster]

15. Here's my take on it

The Republicans are telling the states to not bother coming looking for a bailout. It ain't happening.

So what can we do if we can't pay our bills?

Republican senator shrugs his shoulders and says, I don't care. Go bankrupt.

That's my take on this. It's the Republicans warning the states to bnot even ask for a bailout. Solve your own problem. One way or another.

[NeoConsSuck]

17. Here is someone else's take on it:

He predicted this on Dec 7th:

http://blogs.reuters.com/james-pethokoukis/2010/12/07/secret-gop-plan-push-states-to-declare-bankruptcy-and-smash-unions/

[Thor_MN]

18. "personal responsiblity" for conservatives means "everyone else, not me."

The only time a conservative really means person is when talking about "personal responsibility" and then it only is used to guilt others into leaving them alone.

In just about every other case, if you hear a neocon say "person", they are refering to a corporation. Corporate personhood is their touchstone. Neocons have been very successful in convincing the classical conservatives (those that merely hate anyone that doesn't look, act, talk the same as themselves) that liberals are "taking away personal freedoms". The morans cheerfully vote to give corporations more power, thinking they are ensuring their own rights.

[Roy Rolling]

5. Cornyn-omics= moron-omics

I guess with Texas facing a $27 billion deficit the next two years Cornyn is looking for a way to stick it to Texas state employees. State officials have pissed away the money, now they need to screw someone to cover their asses. Despite having few unions to blame, Texas is in as deep a hole as California but with no scapegoat to pin the blame on.

[Hulk]

6. Brilliant!!

Good Lord...why didn't I think of this? We could just tell all the people on Social Security to "go f*ck themselves!" Hell, that would solve the problem. We could tell all the people on Medicare to "go f*ck themselves!" Jesus...this is easy. Another escape route. We can tell all the retired government workers to "go f*ck themselves". There...we saved a ton of money there. How easy was that?

I swear to God....I have never been so insulted by a political party of clowns than this idea. This is just what we deserve. CUT MY TAXES...and f*ck my neighbor...cause, that's what the American people said on November 2nd. They said...F*CK EVERYONE BUT ME!! Just don't raise my taxes!!

What a simplistic bunch of clowns. This is OUR government. Aren't you as proud as I am???

[madrchsod]

8. the social security system would absorb these pension plans....

and convert them to social security for the workers. the amount would be staggering.

[shanti]

13. i have a pension from the state

and ALSO paid into social security, but am not old enough to collect that for quite some time. if they took my (small) pension, i would be SOL.

[bbgrunt]

9. this is UNACCEPTABLE.

[sulphurdunn]

10. There is no budget crisis.

There is only a conspiracy by the private sector to have its political whores renege on government support for the general welfare of society. Total projected state budget shortfalls for the 2011-2012 fiscal year will be about $125 billion. That is a fraction of the $700 billion federal bailout to a handful of preferred banks, or the $1 trillion Pentagon budget, or the $230 billion Bush tax cut extension, or the cost of allowing corporations to squat an trillions and trillions of dollars that are needed to maintain civil society and which mostly came from state and federal friendly tax policies. The whole goddamn thing is just another gigantic fraud perpetrated against working people. Even without revenue sharing from the federal government, the states could easily balance their budgets by simply raising the revenue they need from those who benefited from the economic crash. They will not do that because they are dominated by the same corporate interests and moneyed ideologues that own Washington.

[Sherman A1]

11. Charming

We just balance the books on the backs of the people who went to work everyday, played by the rules (where did I hear that before... perhaps a campaign a few years ago) and did what was expected of them, only to find out that what they earned & expected (a pension) is just simply gone.

:banghead:
(is it just me or does this little guy seem to be getting used more and more?)

[bongbong]

12. Billionaires ramping up the speed

I wonder why the billionaires are on such a tear to destroy the Middle Class now. The process seems to be getting really, really accelerated. Instead of a timeline like this:

S&L bailout courtesy of the taxpayers in year x, BCCI bailout courtesy of the taxpayers in year x+3, etc

now it's:

bailout #1 courtesy of the taxpayers in week x, bailout #2 courtesy of the taxpayers in week x+3, etc

Events are moving really fast. Kinda scary. The only constant will be this: everybody but the richest 1% will be hurt; most will be painful hurt; and a significant number of Americans will literally die.

BUT LOOK AT THE GOOD SIDE! Billionaires will be able to buy more megayachts!

[shanti]

14. 2012 is soon to be here

don't forget about that! ;-)

[NeoConsSuck]

16. But there is a monkeywrench...

and it's not that hard working state employees who gave their entire life to state service are going to get royally fucked out of their retirement. That poses no problem to the Republican fuckers.

Rather, the monkeywrench is the Wall Street bondholders might have to take a hit also. And of course we can't have that. So this plan isn't ready for prime time yet. The pukes will have to write it in a way that bondholders are not exposed to any loss, the entire burden will be on the state employees.

If I sound a little pissed, I guess I am.