A few weeks ago, James Pethokoukis made waves with an article suggesting a “secret GOP plan” that would give states the ability to declare bankruptcy and basically default on their public employee union and pension contracts. Now, before the election, Pethokoukis’ big scoop was that the Obama Administration would order Fannie and Freddie to forgive mortgage debt on underwater borrowers. As it turned out, the Administration gently nudged the GSEs, who promptly resisted the principal reduction program. So the track record is not dead solid.
There’s no question that Republicans have introduced a bill which would require more transparency on state public pensions, and that they hope this would provide a road map in the states for where they can cut budgets; namely, on the backs of public employees. That doesn’t mean it will happen in exactly that way, however. And the idea that the next Congress will overhaul the 30s-era law allowing states to go bankrupt seems fanciful to me.
But I don’t think states or municipalities need much help from the federal government in their desire to rewrite public employee union contracts. There has been a concerted effort for years to demonize and delegitimize public employee unions, from both Republican pols and the media in general. This has left a distorted impression about greedy union contracts and well-paid government functionaries. So the new class of Republican governors would certainly want to capitalize on that by pleasing the public, who now favors things like wage freezes (which Obama just instituted at the federal level) and furloughs and bigger pension contributions, punishing those workers. And they are animated by a general hatred of unions, which have maintained their strength in the public sector while fading away in the private sector.
Alongside that, there are legitimate budget problems in the states. The National Conference of State Legislatures estimates a $118 billion dollar shortfall in state and municipal budgets in 2011. And there are certainly some states and municipalities with currently unfunded pension liabilities. While federal aid could offset some of that, there’s no chance it will happen – expect the House to pass, early next year, a resolution basically forbidding “bailouts” of the states. At that point, state governments will either have to cut spending or raise taxes to balance their budgets, which almost all of them are constitutionally required to do. With public employees – or rather, cops, firefighters, nurses, teachers, the people who prepare your state tax refund, the people who get you your driver’s license, the people who get the roads and bridges fixed and basically secure your safe passage through the commons – seen in a negative light, they will in many states be lined up for cuts.
http://news.firedoglake.com/2010/12/27/in-unfolding-war-on-public-employees-state-lawmakers-and-media-likely-to-do-the-work-themselves/We can bail out the TBTF banks but not our states. That tells you who's more important in this country.
And I want the citizens who hate unions to MOVE!
Get out of my country before you get the shit knocked out of you!