The New RW Meme: Commentary: States should have the option of bankruptcy protection to deal with the

[unhappycamper]

Commentary: States should have the option of bankruptcy protection to deal with their budget crises
By Jeb Bush and Newt Gingrich | Los Angeles Times
Posted on Friday, January 28, 2011

During the 2008 financial crisis, the federal government reacted in a frantic, ad-hoc fashion, tapping taxpayers for bailouts galore, running roughshod over the rights of bondholders and catching the American people unaware and unprepared. In contrast, we still have time to prepare for the looming crisis threatening to engulf California, Illinois, New York and other state governments.

The new Congress has the opportunity to prepare a fair, orderly, predictable and lawful approach to help struggling state governments address their financial challenges without resorting to wasteful bailouts. This approach begins with a new chapter in the federal Bankruptcy Code that provides for voluntary bankruptcy by states, a proven option already available to all cities and towns across America.

The figures for next year's budgets are staggering. California, which faces a $25.4 billion budget shortfall, will pay $100,000-plus pensions to more than 12,000 state and municipal retirees this year. A Stanford study puts the state's unfunded pension obligations at more than half a trillion dollars. Illinois has a $15 billion budget deficit, prompting its governor and lame-duck legislature to hike its personal income tax rate by 66 percent. New York, where 73 percent of the government workforce is unionized, is staring at a $10 billion deficit.

There has been an organized federal bankruptcy process for municipalities since the 1930s, and a handful of cities, towns and counties - most notably California's Orange County in 1994 - have gone through municipal bankruptcy and put their fiscal houses in order. A bankruptcy option for the states would look very similar to Chapter 9 municipal bankruptcy, with some necessary modifications.

First, as with municipal bankruptcy, it would have to be completely voluntary. This means that neither the federal government nor state creditors could push an unwilling state into bankruptcy, no matter how catastrophic the state's finances may be, as this would violate the U.S. Constitution's protection for a state's sovereign immunity.



unhappycamper comment: If you fuckers would stop hemorrhaging dollars in the sandbox and on the military, we would be able to provide for the citizens of this country.

[mmonk]

1. I thought they were giving tax payers tax cuts.

[unhappycamper]

2. Well, the cost of these occupations are not "on the books".

The occupations are on the national credit card. And the bill is becoming due.

[mmonk]

3. In other words, they haven't been tapped yet.

So they want to get out of the obligation by dismantling the public square.

[unhappycamper]

4. Yup.

Anytime a Jeb or a Newt proposes anything it's for their corporate masters, not we the people. :(

[nxylas]

5. They want to dismantle the public square, period

Their whole ideology is based selling off the public square to the highest bidder.

[onethatcares]

6. whenever you see those two names together

you can bet nothing good for the citizens is going to follow.

Let's put elected representative pensions, healthcare and perks on the chopping block. Let's introduce laws that limit legislators salarys to no more than 5K above the median income for a family of 4 while they are in office.

This is all about killing the public service employee unions and the middle class.

I hear none of these so called elected officials calling for the end to double dipping or triple dipping by their cronies.