Secret GOP plan: Push states to declare bankruptcy and smash unions

[Truth2Tell]

From: Reuters

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

James Pethokoukis

Congressional Republicans appear to be quietly but methodically executing a plan that would a) avoid a federal bailout of spendthrift states and b) cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011.

That’s why the most intriguing aspect of President Barack Obama’s tax deal with Republicans is what the compromise fails to include — a provision to continue the Build America Bonds program. BABs now account for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31. And my Reuters colleagues report that a GOP congressional aide said Republicans “have a very firm line on BABS — we are not going to allow them to be included.”

In short, the lack of a BAB program would make it harder for states to borrow to cover a $140 billion budgetary shortfall next year, as estimated by the Center for Budget and Policy Priorities. The long-term numbers are even scarier. Estimates of states’ unfunded liabilities to pay for retiree benefits range from $750 billion to more than $3 trillion.

Republicans in the House of Representatives already want to stop state and local governments from issuing tax-exempt bonds unless they are more forthright about these future obligations. Republican Representatives Devin Nunes and Darrell Issa of California and Paul Ryan of Wisconsin have introduced a bill that would require state and local governments to estimate the size of public pension liabilities if their assets earned a more conservative rate of return than many plans currently expect. Failure to do so would result in the suspension of their ability to issue tax-exempt bonds.

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

[northoftheborder]

1. This is unbelievably scary. Who spawned these monsters?

Get ready to tighten your belts. Liquidate all investments, is my gut feeling. We're headed for a depression, and guess who will be blamed.

[abelenkpe]

4. Who spawned?

Libertarians. They are f-ing monsters. We should be scared of them.

[abelenkpe]

2. Yeah they've been pretty

open about that for a while, at least on Libertarian blogs and such. Good to see this getting more attention though.

[AndrewP]

3. They were talking about this tonight on NPR

The GOP are sick sick fucks

[madrchsod]

5. so they want to cause a depression in this country?

bankrupting the top five states would cause a full blown depression in this country and would spread across the world

[reformist2]

6. They do. They call it "starving the beast".

This is why they are so hell bent on preserving their tax cuts.

[Truth2Tell]

7. technically they can't "bankrupt" a State,

but they can cause a lot of similar consequences, including squeezing public employee unions out of existence.

[NeoConsSuck]

8. I made a few posts on DU about pukes pulling the plug on the states

That 700 billion handout to the rich is going to be the excuse not to hand out aid to states in 2011. Sorry states, we can't help you, the deficit is too high.

The tax cuts primary purpose was a handout to the rich, secondary purpose was to deny aid to states. Stop aid to states, and you break the unions. Break the unions, and you break the last large contributors to the Democratic party. Who's left to contribute, Hollywood stars??

And sad to say, Obama enabled this whole mess.

[Name removed]

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[Poboy]

10. recommend.