Let's Make It Official: Congress Quietly Working On Bill To Permit States To Declare Bankruptcy

Let's not notice the states in danger of bankruptcy are those controlled absolutely by liberals.

Before you say "They should be forced to live with their debt," remember (as I failed to) that the states have made contractual obligations to, for example, their unions' pension funds, and states are constitutionally barred from canceling/modifying their contracts. As things stand. (If I have this right: they're so barred by their own constitutions. See the link at the bottom of the post.)

So... I think if states are going to unilaterally change their contracts with unions they will need some escape clause like this. Whether that's Constitutional or not I don't know. It sounds like a "not" but, as I'll quote later, some guy says this is an easy call, and it's quite constitutional.

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.

...

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

Putting aside the constitutional question (just because I don't know the answer), there would be two good effects:

1. There would be no further empty promises of future contributions to state employee pension/retirement funds because no one would ever believe a state again. All further such schemes would have to be cash-and-carry, contributions happening now, and that will tend to limit them, because...

2. States, especially incorrigibly liberal tax-eating ones, will not be able to issue bonds except in small amounts, and they'll have to pay higher rates just to sell those, and they'll wind up being far less attractive to states. No one will trust them. States will be compelled to live within their means, more or less.

On the other hand, this seems likely to produce a crisis of confidence. But then, I think we're already living in a crisis of confidence (and for good reason), so this is mostly just a recognition of reality.

On the constitutional question, this professor writing at the Weekly Standard says the issues are "easily addressed."

When the possibility is mentioned of creating a new chapter for states in U.S. bankruptcy law (Chapter 8, perhaps, which isn’t currently taken), most people have two reactions. First, that bankruptcy might be a great solution for exploding state debt; and second, that it can’t possibly be constitutional for Congress to enact such a law. Surprisingly enough, this reaction is exactly backwards. The constitutionality of bankruptcy-for-states is beyond serious dispute. The real question is whether the benefits would be large enough to justify congressional action. The short answer is yes. Although bankruptcy would be an imperfect solution to out-of-control state deficits, it’s the best option we have, at least if we want to have any chance of avoiding massive federal bailouts of state governments.

Start with the issue of constitutionality. The main objection to bankruptcy for states is that it would interfere with state sovereignty—the Constitution’s protections against federal meddling in state affairs. The best known such barrier is the Tenth Amendment, but the structure of the Constitution as a whole is designed to give the states a great deal of independence. This concern is easily addressed. So long as a state can’t be thrown into bankruptcy against its will, and bankruptcy doesn’t usurp state lawmaking powers, bankruptcy-for-states can easily be squared with the Constitution. But the solution also creates a second concern. If the bankruptcy framework treads gingerly on state prerogatives, as it must to be constitutional, it may be exceedingly difficult for a bankruptcy court to impose the aggressive measures a state needs to get its fiscal house in order.

That bothers me, because I'd like to see conditions imposed here that this guy is saying can't be imposed.

Southern states are famously not completely sovereign as regards their election laws. This is due to federal law, prompted by Jim Crow and then the Voter Rights Act -- the states of the old Confederacy must submit their proposed changes to election law for "pre-clearance" by the Justice Department, which then either certifies or rejects the proposed changes, based on whether the changes (in their opinion) would disadvantage minority voters.

In other words, part of southern states' sovereignty was withdrawn because they did bad things with it.

It's time for some other states to similarly have pieces of their sovereignty withdrawn. Any state which seeks these bankruptcy protections (should they come to pass) should, for decades, until they prove themselves, be required to pre-clear all tax and spending initiatives with some federal agency.

States' rights, you might object. Well, yes, but adults have full legal control of their lives; children and incompetents and mental defectives do not. And these states are children and incompetents and mental defectives.

That will be humiliating for these states and their majority-liberal citizenry; good, it should be humiliating. Deadbeats and spendthrifts ought to be humiliated.

So when this guy says the law and courts will have to "tread gingerly" to avoid usurping state sovereignty... well, if so, that seems very far from optimal to me.

With liquidation off the table, the effectiveness of state bankruptcy would depend a great deal on the state’s willingness to play hardball with its creditors.

That's the rub, then -- what's being proposed may give politicians beholden to the unions the power to modify contracts, but they might simply refuse to exercise that power -- in which case, what is gained?

Monty's Take:

It's not clear to me if these bankruptcy discussions are actually
serious proposals, though, or just a way to try to scare the unions
into making deals. And the unions aren't stupid; they know that a real
state bankruptcy is very unlikely, and that pension/healthcare
cramdowns for public employees in many states wouldn't survive a court
challenge. So it's going to make for some interesting brinksmanship
going forward.

The professor writing at the Weekly Standard doesn't agree that the cramdown is a problem:

But if they dug in their heels and resisted proposals to restructure their debt, a bankruptcy chapter for states should allow (as municipal bankruptcy already does) for a proposal to be “crammed down” over their objections under certain circumstances. This eliminates the hold-out problem—the refusal of a minority of bondholders to agree to the terms of a restructuring—that can foil efforts to restructure outside of bankruptcy.

I don't know.

I think Monty is right at least about the threat to unions this could hypothetically present, but in reality does not: If liberal politicians in liberal states were serious about reneging on absurd promises made to secure union support, just the threat of bankruptcy could spur renegotiations and restructurings.

But those politicians are not serious about doing that. So... again, I wonder, without taking away their power to decide their spending and tax policy (which the professor seems to believe is completely unconstitutional), what is gained?

Hey, You Know What Might Be Just Swell? Some Punitive, Confiscatory Taxation: The good kind.

What good kind, you ask?

Well, AmishDude has an idea about how to fix the problem with these bankrupting pension fund obligations if the unions won't play ball:

So what? Put a 100% surtax above a certain amount for revenue earned from a union pension fund state employees.

Problem solved.

Perfect! In theory, the state pays out its commitments, but then just taxes that payout above the level its comfortable with at a full 100% so the money goes "out" for half a second and then is immediately impounded again as a tax.

It's using their tactic of "tax 'em hard until we tax our preferred world into existence" strategem against them.

That's kind of brilliant, really.

Isn't it?

Posted by: Ace at 12:40 PM



Comments

1 We're boned.

Posted by: Have Blue at January 21, 2011 12:43 PM (mV+es)

2 How much of what should be state spending will the feds try and pick up? We are already told that the feds have to fund primary education or the world will collapse.

Posted by: Have Blue at January 21, 2011 12:44 PM (mV+es)

3 "tread gingerly"

Raaaaacist!

Posted by: HeatherRadish at January 21, 2011 12:45 PM (4ucxv)

4 How much of the workforce is unionized in this country? I thought I heard somewhere that it was a relatively small amount, like 25% or something. If it is that small, how can they be so powerful as to bankrupt states?

Posted by: BeckoningChasm at January 21, 2011 12:47 PM (081kp)

5 "That will be humiliating for these states and their majority-liberal
citizenry; good, it should be humiliating. Deadbeats and spendthrifts
ought to be humiliated."

You had me at humiliating.

Posted by: Guy who pays his bills (and feels like a fool for doing it) at January 21, 2011 12:47 PM (LH6ir)

6 They should be forced to live with their debt," remember (as I failed
to) that the states have made contractual obligations to, for example,
their unions' pension funds, and states are constitutionally barred from
canceling/modifying their contracts. As things stand.

So what? Put a 100% surtax above a certain amount for revenue earned from a union pension fund state employees.

Problem solved.

Posted by: AmishDude at January 21, 2011 12:48 PM (T0NGe)

7 Let's pay these Union cocksuckers .01 on the pension dollar.
Then tell them to fuck off.

Posted by: Pegs Noonan at January 21, 2011 12:48 PM (EL+OC)

8 OK, I realize they may not be the most popular people in the world, but suddenly pulling some retired state worker's pension will accomplish what, exactly?

Throw him on welfare immediately? That's not free either.

Posted by: CoolCzech at January 21, 2011 12:48 PM (tJjm/)

9 I can see how this'll destroy the public sector unions--their promises to extract more and more benefits for their members will also be hollow.

In fact all Republicans should get behind this with an offer they can't refuse: "We'll let you file bankruptcy on the condition that all public sector unions be illegal for 12 years."

Posted by: Jimmuy at January 21, 2011 12:49 PM (0yTk1)

10 Any state which seeks these bankruptcy protections (should they come to pass) should, for decades, until they prove themselves, be required to pre-clear all tax and spending initiatives with some federal agency.



With the way the Feds pass out waivers for their political allies when things get too tough, that's really not much of a threat.

Posted by: Laurie David's Cervix at January 21, 2011 12:49 PM (4oFvc)

11 How much of the workforce is unionized in this
country? I thought I heard somewhere that it was a relatively small
amount, like 25% or something. If it is that small, how can they be so
powerful as to bankrupt states?

Posted by: BeckoningChasm at January 21, 2011 12:47 PM (081kp)
Public "service" employees...they hold the states hostage.

Posted by: Tami at January 21, 2011 12:49 PM (VuLos)

12 I like this idea for my state of California, but it will never happen. The unions know that they are going to be the primary "victims" of state bankruptcy.
They will just find some way to weasel around Prop13 and raise property taxes again.

Posted by: wooga at January 21, 2011 12:50 PM (2p0e3)

13 Long Post so will address it in parts:

Before you say "They should be forced to live with their debt," remember
(as I failed to) that the states have made contractual obligations to,
for example, their unions' pension funds, and states are
constitutionally barred from canceling/modifying their contracts.

But how did this get in the liberal States Constitutions? Also if it gets in, it can get out.

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.

Why are they barred, its not in the Constitution? As for the BS "sovereign" argument States haven't been considered "sovereign" since 1865.

And as was pointed out to me yesterday, the Constitution does give the feds power to set bankruptcy law which makes the feds sovereign in the bankruptcy law court.

Posted by: Vic at January 21, 2011 12:50 PM (M9Ie6)

14 Throw him on welfare immediately? That's not free either.

Posted by: CoolCzech at January 21, 2011 12:48 PM (tJjm/)
The problem is that the amounts are far above welfare levels.

Posted by: AmishDude at January 21, 2011 12:50 PM (T0NGe)

15 Go the Iceland route. Declare anyone currently or previously in appointed or elected office ineligible to again serve in either sort of capacity on any level. Then do a 'clean slate' election and let the chips fall where they may, with proper efforts to keep 'interest candidates' out of course.

Good times. Never going to happen, but a guy can dream.

Posted by: AoSHQ's DarkLord© at January 21, 2011 12:50 PM (GBXon)

16 Here's a plan: Allow whatever states that want to declare bankruptcy to do so, but strip them of their congressional representation.

Posted by: Blacque Jacques Shellacque at January 21, 2011 12:51 PM (nD3Pg)

17 8. My in-laws are both getting state pensions right now, on top of SS, and his military pension . . . oh and her fake disability.

Their house is and has been paid off and they do literally nothing but go shopping. The only entity that would be hurt by him losing his state-store-given pension is QVC.

Jeez maybe they would do something ELSE with their time! They're still in their 60s.

Posted by: BlackOrchid at January 21, 2011 12:52 PM (SB0V2)

18 That will be humiliating for these states and their majority-liberal citizenry

Que? Voy a recibir me dinero o no? Si? Okay, hasta manana y Go Obama!

Posted by: Jose in California, not actually a citizen but probably a voter at January 21, 2011 12:52 PM (RUkD3)

19 The other bankrupt states could do what the Fat Bambino Man in New Jersey is doing,sell their souls to Hamas while scamming the budget with RGGI funds.

After all, The Fat Bully is a Republican hero.

Posted by: Susan at January 21, 2011 12:52 PM (p+8kM)

20 Amish-- hey, that's a great idea, and I love the irony of using their own "tax the shit out of them to reorder the world our prefered way" tactic against them.

Posted by: ace at January 21, 2011 12:52 PM (nj1bB)

21 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.

Yeah, that is exactly what we need. Let SEIU become the defacto State government in CA, IL, etc. and that AFTER getting 200 megatrillion dollars for a bailout.

These people have gone full retard.

Posted by: Vic at January 21, 2011 12:53 PM (M9Ie6)

22 Let bankruptcy reduce them to territorial status. All state contracts null and void, no representation in Congress, and an appointed Governor/legislature.

If the voters elected the government(s) that run the state into the ground, they need to surrender that right until such time as the state can emerge from bankruptcy.

It can't be all 'ditch the obligations, keep the gravy train going' with no down side.

Posted by: nickless at January 21, 2011 12:54 PM (MMC8r)

23 >>On the other hand, this seems likely to produce a crisis of confidence.

That's going to happen anyway, and its going to be a lot worse if (ie when) the states default on their obligations without a clear escape route planned in advance.

Bottom line is, the States can't cover the debt, which means that one of two things will happen (and they're not mutually exclusive):

a. The ones they owe the money to get screwed, or
b. Someone ELSE (ie the Federal taxpayer, ie the citizens from the responsible states) will pay the debt.

So I don't know what the ultimate outcome here is going to be, but in general, the sooner it happens the better for everyone.



Posted by: looking closely at January 21, 2011 12:54 PM (PwGfd)

24 Granting states a do-over on the backs of their employees and bondholders sets a horrible precedent unless it's accompanied by asset sales and a wholesale dismantling of the cost structure of government. I don't for one second believe that the federal government will force a true revision of the scope and cost of government in states like CA, NY IL. It's easy to say, "screw the public employee unions," and I'm inclined to agree with that sentiment, but allowing the government to stiff employees, creditors vendors without true reform could lead to exactly the opposite of the responsible and prudent steward they should be.

Posted by: Ted Kennedy's Gristle Encased Head at January 21, 2011 12:54 PM (+lsX1)

25 be required to pre-clear all tax and spending initiatives with some federal agency.

Gawd that's funny. It is easy to visualize this federal agency telling Texas that their "spending initiatives" are not spending enough and mandating that the state pass additional taxes to comply with the new mandated spending.

Posted by: Follower of Cthulhu at January 21, 2011 12:56 PM (F/4zf)

26 What would the states share of the oil and NG off the coast of California be worth? Not to mention the fact that it would have employed thousands who now collect unemployment.

Posted by: Have Blue at January 21, 2011 12:56 PM (mV+es)

27 Every Susan I've ever known has been really good at smoking pole.

Posted by: Mr Pink at January 21, 2011 12:57 PM (1WcGr)

28 24..... bravo!!

The cost structure HAS to change. What cannot happen is Treasury pay off their current credit cards without changing their spending habits.

Posted by: fixerupper at January 21, 2011 12:57 PM (J5Hcw)

29 In fact all Republicans should get behind this with an offer they can't
refuse: "We'll let you file bankruptcy on the condition that all public
sector unions be illegal for 12 years."

FTFY

Posted by: Vic at January 21, 2011 12:57 PM (M9Ie6)

30 On the other hand, this seems likely to produce a crisis of confidence.
That's
going to happen anyway, and its going to be a lot worse if (ie when)
the states default on their obligations without a clear escape route
planned in advance.

Hell it is ALREADY happening. The only people buying CA bonds right now is the federal government who has been bailing them out since early 2009.

Posted by: Vic at January 21, 2011 12:59 PM (M9Ie6)

31 Union membership = 11.9% as of last year.
"The number of private-sector workers in unions fell by 339,000, to 7.1
million, while the number of public-sector union members fell by 273,000
to 7.6 million."

Posted by: Dr Spank at January 21, 2011 12:59 PM (45DBC)

32 Link was to Mike Vick article.

Posted by: Y-not is happy it's Friday at January 21, 2011 12:59 PM (pW2o8)

33 these sovereign states need to outlaw public sector unions as a prerequisite to anything.

Posted by: X at January 21, 2011 01:00 PM (V6CZ8)

34 So long as a state can’t be thrown into bankruptcy against its will
PAY NO ATTENTION TO THE OBAMACARE MEDICAID MANDATES HIDING BEHIND THE CURTAIN. BECAUSE THAT WOULD BE RACIST AND RESULT IN TERRIBLE SUFFERING FOR PEOPLE WHO CAN'T DO FIFTH GRADE MATH. Or something.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:00 PM (B+qrE)

35 But, but...we promised them your money!

Posted by: Liberals in State houses at January 21, 2011 01:01 PM (FcR7P)

36 Perfect! In theory, the state pays out its commitments, but then just taxes that payout above the level its comfortable with at a full 100% so the money goes "out" for half a second and then is immediately impounded again as a tax.

They should tax at 110% to cover administrative costs.

Posted by: maddogg at January 21, 2011 01:01 PM (OlN4e)

37 Alternate headline: "Illinois Postmaster General Preparing tro Receive Forty Million Unsolicited Credit Card Offers."

Posted by: Sharkman at January 21, 2011 01:01 PM (8sD9j)

38 What is interesting to me is that CA could essentially un-bone itself simply by not catering to all the illegales.

So will they throw their former state workers under the bus for the new colonizers?

I guess it remains to be seen, but it sure doesn't look good.

Posted by: BlackOrchid at January 21, 2011 01:02 PM (SB0V2)

39 What is thefuture for states that get no Federal bailout, and no bankruptcy declaration?
They will default anyway,and it will be chaotic. And that iswhat will happen, because the Federal bailouts are simply not going to happen.
It's also worth remembering that State legislatures come and go. Union-beholden legislatures are in power now, but in two years, four years...
This conversation has only just begun.

Posted by: Wm T Sherman at January 21, 2011 01:02 PM (w41GQ)

40 >32
Link was to Mike Vick article.

Mine?

Posted by: Dr Spank at January 21, 2011 01:03 PM (45DBC)

41 Liberals + economic knowledge = Cloward Piven x destruction.
blame and thrash.

Posted by: Lemon Kitten at January 21, 2011 01:03 PM (0fzsA)

42 You know what?

That Ace ewok makes a good point. There is no way this would work, state leaders will never declare bankruptcy because their union thug owners will not allow it.

There will be no federal bailout for these states. At least not because these blue states have already maxed out their congressional representation. Cali already has 2 democrat senators, for example. No purple or red state is going to rally behind bailing out union thugs who make more than their own citizens do.

It seems that there's no real way for the feds to force the states to take action because of the constitution and everything.

The only solution is another civil war. oh wait, new tone. But seriously, if California, for example, drowns itself in debt, can't pay its bills, can't sell bonds because noone will buy them then...? There'd have to be a forceful de-stating of California by the Feds because the California powers that be will never accept it peacefully or willingly. Then the Southern reintroduction model comes into play.

Posted by: joeindc44 at January 21, 2011 01:03 PM (QxSug)

43 Stop the damned welfare for those able to work. If an able-bodied person wants welfare, then they should work for it cleaning streets, picking up trash, doing whatever they are capable of doing to benefit society. I bet the welfare coffers would decrease drastically if people had to actually work for it.

Posted by: havedash at January 21, 2011 01:03 PM (sFD5n)

44 Unions.

Posted by: garrett at January 21, 2011 01:04 PM (GZb/c)

45 That will be humiliating for these states and their majority-liberal
citizenry; good, it should be humiliating. Deadbeats and spendthrifts
ought to be humiliated.

You are living in a dream world Ace. Since when does humiliation work with liberals? They want this not to cancel or reduce these debts but to have someone else, a judge, to blame for when they raise taxes. They want this so they can continue to do what they are doing and pass the political consequences onto someone else. Evetually they will get so bad, across large swaths of the country, that the federal govt will have to cough up cash.

As far as it being in their state constitution there is already a remedy for that, ammendment. But they don't want to do that either. I wonder why?

Posted by: Rocks at January 21, 2011 01:04 PM (Q1lie)

46 In this context, personal growth is living to grow another day older.

Posted by: Personal Growth at January 21, 2011 01:05 PM (UhGhS)

47 Starting to suspect that Ace gave his username and password to Allahpundit a few days ago and went on a epic bender.

Posted by: Follower of Cthulhu at January 21, 2011 01:05 PM (F/4zf)

48 Put a 100% surtax above a certain amount for revenue earned from a union pension fund
I like it! Beats letting Big Gov't redefine states' rights in bankruptcy court.

Posted by: Stillwater at January 21, 2011 01:06 PM (0GpN4)

49 I don't see the incentive for the Democrats in CA, IL, NY, or MI to declare bankruptcy. What do they care? Just keep paying and taxing and wait for Obama to somehow assume their debt to the unions.

Posted by: t-bird at January 21, 2011 01:07 PM (FcR7P)

50 There is no way this would work, state leaders will never declare bankruptcy because their union thug owners will not allow it.


Union Leader Lord Humongous.

Nice ring to it.


Posted by: nickless at January 21, 2011 01:07 PM (MMC8r)

51 Stop the damned welfare for those able to work.

Bring back Poor Farms and make them do hoeing instead of hoing.

Posted by: Buzzsaw at January 21, 2011 01:07 PM (tf9Ne)

52 If state pension unions have so much power as to not negotiate, they have enough power to prevent the 100% surtax on state pensions.

Posted by: Guy Fawkes at January 21, 2011 01:08 PM (xdHzq)

53 I still prefer Thunderdome.

Posted by: Dr Spank at January 21, 2011 01:08 PM (45DBC)

54 I think our spam is getting a bit more surreal. (Though at the moment, it's a valid point...)

Posted by: AoSHQ's DarkLord© at January 21, 2011 01:08 PM (GBXon)

55 Mine eyes have seen the glory of the coming of the Boot;It's trampling on thecontract Union pensionextorted loot;Ithath loosedit's fateful lightening on Blue states' cokerimmed snoot;Chapter 13's coming on.Glory! Glory! Hallelujah! Glory! Glory! Hallelujah!Glory! Glory! Hallelujah! Chapter 13's coming on.~sungto the Battle Hymn of the Republic tune

Posted by: Speller at January 21, 2011 01:08 PM (J74Py)

56 I learned the hard way during the United Airlines bankruptcy, that the ONLY folks who get a say in how the restructure goes, is the fat cats.
There were enough assets in United to sell off, and make all the debts and investors whole, yet they kept the company intact, and screwed everyone else.
Funny how in personal Bankruptcy, that does not happen... you loose most of your possesions... and can only keep very specific things... yet Companies seem to be the winners out of Bankruptcy court.
Look to GM as the model if States are allowed to go bankrupt... Unionistas and the State will win... bondholders, and anyone else who owns State Debt? Hosed.

Posted by: Romeo13 at January 21, 2011 01:08 PM (AdK6a)

57 O/T: Just turned up the sound on CNBC when I saw POTUS talking. The first comment I heard was "there sems to be a better relationship between the president and business".

Posted by: curious at January 21, 2011 01:09 PM (p302b)

58 57. So long as that business is GE or Comcast

Posted by: BlackOrchid at January 21, 2011 01:09 PM (SB0V2)

59 Speller at January 21, 2011 01:08 PM (J74Py)
Nice.

Posted by: Roadking at January 21, 2011 01:10 PM (DRXeq)

60 There's a very serious proposal going around in public finance circles to subordinate pension debt and union contracts because they were not negotiated at arm's length. Maybe some of our resident barristers can put me some knowledge about how often a contract is invalidated for such reasons, but there's no argument that these contracts don't qualify as at arm's length.
We even have video of our governor at a union rally telling his cheering throngs about the great new contract he's going to "negotiate" with them.

Posted by: spongeworthy at January 21, 2011 01:10 PM (rplL3)

61 51: Uhhhhh...do you really want the inevitable optics of that?

Much as the theory and principle have merit, I think we can figure out what would happen in a hurry...

Posted by: AoSHQ's DarkLord© at January 21, 2011 01:10 PM (GBXon)

62 Unions.
Unions, indeed.
The public needs to ask the Democrat/Union/Media conglomerate -
Why do we pay for endless union perks,bonuses, raises and juicy pensions -whileWEmust fund our own retirements?
Why do unions get to bankrupt our nation while the rest of us go to the poor house?
Democrat answer: Tax the rich, tax evil corporations,kill the private sector industry, all while payingdemocrat liarlip service to "small business". Cloward Piven.

Posted by: Lemon Kitten at January 21, 2011 01:11 PM (0fzsA)

63 There's one problem with your pension tax scheme, the Equal Protection clause. The only way that passes muster is if all pensions, public and private, are subject to the same tax. I'm sure the Libs would love that but I don't really see why private pensions should be taxed so heavily just because I state gave away the farm to it's employees.

Posted by: Rocks at January 21, 2011 01:11 PM (Q1lie)

64 I like the old idea of making these states territories until such time they get their house in order, no senators, reps, or electoral votes. Take some stars off the flag.


Posted by: Guy Fawkes at January 21, 2011 01:12 PM (xdHzq)

65 What is interesting to me is that CA could essentially un-bone itself simply by not catering to all the illegales. No, it is not that simple.
Here is the actual simple answer: Get the economy of the country moving again. Want to unbone Cali? DRILL. DRILL and then DRILLsome more. Having said that--if the Cali nitwits want to stay behind--let them. There is a reason Texas is not in this shape: They refuse to drive over the cliff to simply enjoy the pre-impact high the welfare state give to its dependents.
The idiotic economic polices that we have in place of in this country boggle the mind. From corporate taxes to capital gains to the monumentally stupid farm subsidies, to the Fed buying bonds....from itself....agggghhhhhhhh.
We are in the terminal foot of the pre-impact high. Enjoy.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:12 PM (B+qrE)

66 The only way that passes muster is if all pensions, public and private, are subject to the same tax.
Rocks, we do not do that now. I do not see an equal protection issue.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:13 PM (B+qrE)

67 A friend of mine said they want to be able to do bankruptcy so they can raid the pension funds. Apparently, now there are strict laws preventing this. He said it in passing and I haven't had the chance to ask him to explain it but it was preceded by "if my parents lose their pensions, guess who is on the hook?"

Posted by: curious at January 21, 2011 01:13 PM (p302b)

68 Eschewing my normal economic refrain for once, let me quote Ryan McCombs:

One - Something's got to give

Two - Something's got to give

Three - Something's got to give

Now



Let the bodies hit the floor

Let the bodies hit the floor

Let the bodies hit the floor

Now

Posted by: that guy that always thinks we're boned at January 21, 2011 01:15 PM (S5YRY)

69 The Mafia crackdown is beginning to make sense, now. When the suck-ass dem. politicians renege their campaign promises and the unions get royally screwed (as they should be), the unions won't be able to hire contract killers, because they'll all be in prison.

Posted by: Fritz, with tongue in cheeks, baby! at January 21, 2011 01:15 PM (GwPRU)

70 re AmishDude's idea to tax the pension funds: I'm not a lawyer, but I'm sure that there will be an immediate claim that this is a bill of attainder and therefore illegal.

Posted by: pep at January 21, 2011 01:15 PM (GMG6W)

71 This the first act of a three act fucking.

First the liberals float this idea, act one.

Then the congress, mainly the Senate, gash their teeth and declare it impossible, because it will fuck their union bosses, act two.

Final Act? Federal bailout "loans" secured by bogus state bonds, we should call this Obama Stimulus Three, another union payoff.

Inflation will pay them off and your savings will be worth nothing.

See NYC bailout 70's for the blue print.

Have a nice day.

Posted by: Kemp at January 21, 2011 01:15 PM (JpFM9)

72 As has been mentioned before, this sort of bankruptcy CANNOT proceed the way the GM bankruptcy did, i.e., the unions their pensions/layabout jobs/free healthcare went to the head of the line, ahead of even the secured creditors.

The promises made to govt workers, and enshrined in the constitutions of these bankrupt states (which is why the states are bankrupt, duh) must be overruled. Debts that cannot be paid won't be paid, and at some point that reality will have to be faced, like it or not.

Posted by: Boots at January 21, 2011 01:15 PM (neKzn)

73 The same people who were screaming bloody murder about the housing bubble six or seven years ago started hollering about potential muni defaults about a year ago. Looks like the pace of this thing is picking up.

Posted by: mongo78 at January 21, 2011 01:15 PM (2b46R)

74 " Put a 100% surtax above a certain amount for revenue earned from a union pension fund state employees.

"

Wouldn't 120% be better?

Posted by: Stoop Davey Dave at January 21, 2011 01:15 PM (Wv7Uh)

75 It's easy to say, "screw the public employee unions," and I'm inclined
to agree with that sentiment, but allowing the government to stiff
employees, creditors vendors without true reform could lead to
exactly the opposite of the responsible and prudent steward they should
be.

Dude? You loaned money to the state? That is like loaning a compulsive gambler money. And you want me to feel sorry for them?

Vendors extend credit to a known shopaholic, and you want me to feel sorry for them when they get stiffed?

Face it. No creditor or vendor would have ever extended as much credit to a real person or corporation as they did the state.

Treating States as a 0 risk credit investment gives States huge sources of credit to draw off of, thus enabling their spendaholic habits. Since that 0 risk credit mentality is a primary enabler of out of control spending we have to modify creditors risk evaluation with the state. No threat that next time someone will take losses will change behavior, it simply won't b real to the creditors. As Niska would say, we have to make it real for them. So that they will be more prudent in the future.

Posted by: MīcÞeMūß at January 21, 2011 01:16 PM (0q2P7)

76 "Look to GM as the model if States are allowed to go bankrupt... Unionistas and the State will win... bondholders, and anyone else who owns State Debt? Hosed."

Granted that's the status quo. However, allowing states to declare bankruptcy would ameliorate that somewhat.

Posted by: kathleen at January 21, 2011 01:16 PM (NKTR5)

77 LA 911: 911, where's your emergency?

Resident: My house has been set on fire and an illegal is raping my Grandmother. Help Help!

LA 911: Hold on.


Posted by: Barbarian at January 21, 2011 01:16 PM (EL+OC)

78 I saw something yesterday that said something to the effect that LA is spending $300 million a month just on welfare for illegals. Don't quote me on the figure, but you get the idea.

Posted by: havedash at January 21, 2011 01:17 PM (sFD5n)

79 Rocks, we do not do that now. I do not see an equal protection issue.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:13 PM (B+qrE)

Really? What pension income is taxed at different rates?

Posted by: Rocks at January 21, 2011 01:17 PM (Q1lie)

80
This is rich.

A couple of weeks ago some here were arguing for earmarks because it was already 'alotted' monies.

So here we are pretending we have only two choices: a) keep spending and hope the problem goes away, or b) keep spending and default, and then start the whole cycle all over again.

The obvious solution is to do what private citizens do when they're in a pinch: stop spending on everything but the essentials.








Posted by: Everyone Wang Dong Tonight at January 21, 2011 01:17 PM (uFokq)

81 "Inflation will pay them off and your savings will be worth nothing."

Yeah, but their pensions will be worth nothing as well.

Posted by: kathleen at January 21, 2011 01:18 PM (NKTR5)

82 Since in theory, each state is a sovereign entity, it has the inherent power to default onits own debts with impunity. The only thing that could prevent this is a provision in the state's own constitution that prohibits that option. If the constitution prohibits defaulting on debts, then the constitution needs to be amended.
Bankruptcy, a federal remedy, should be irrelevant to the financial situation of a state. What power does the federal government have to relieve an ostensibly sovereign state of its debts, or to restructure them?

Posted by: Cicero at January 21, 2011 01:18 PM (QKKT0)

83 26
What would the states share of the oil and NG off the coast of California be worth? Not to mention the fact that it would have employed thousands who now collect unemployment.
Posted by: Have Blue at January 21, 2011 12:56 PM (mV+es)
We are alleviating symptoms here (or trying to). Get with the program.

Posted by: Dog and Pony Show at January 21, 2011 01:18 PM (9ZYFw)

84 The promises made to govt workers, and enshrined in the constitutions of these bankrupt states (which is why the states are bankrupt, duh) must be overruled. Debts that cannot be paid won't be paid, and at some point that reality will have to be faced, like it or not.
Posted by: Boots at January 21, 2011 01:15 PM (neKzn)
But, with the power that the Public sector Unioins weild? With the Hundreds of Millions in campaign contributions they make???
Anyone fiscaly sane will aggree with you, but the POLITICS point elsewhere, which is the real problem.

Posted by: Romeo13 at January 21, 2011 01:19 PM (AdK6a)

85 Amish-- hey, that's a great idea, and I love the irony of using their
own "tax the shit out of them to reorder the world our prefered way"
tactic against them.

Yes, brilliant. What could ever go wrong with allowing the state to implement a 100% tax on "excess compensation?" Why is it that every solution to the government making a clusterfuck of things is more government? If a state screws the pooch, the feds will make it better by taking over. The state makes promises it can't keep, it gets to erase those problems by taking more money from some people while being excused from the obligation of paying others.

Absent a willingness from government to shrink its size and importance, this fiscal problem doesn't go away with bankruptcy.

Posted by: Ted Kennedy's Gristle Encased Head at January 21, 2011 01:19 PM (+lsX1)

86 "A friend of mine said they want to be able to do bankruptcy so they can raid the pension funds."

How do you "raid" an empty account?

Posted by: kathleen at January 21, 2011 01:19 PM (NKTR5)

87 with all the biotching and moaning and lobbying, business seems to have less strict rules than they would lead you to believe and yet, people are still losing their homes and their jobs so it really does seem as though the people have no one biotching and lobbying for them. So they are getting screwed. If you read this article that I posted in the headlines thread it really makes you wonder.

Posted by: curious at January 21, 2011 01:20 PM (p302b)

88 What states? Link is to a Michael Vick story.

Posted by: Timbo at January 21, 2011 01:20 PM (ph9vn)

89

How do you "raid" an empty account?

Posted by: kathleen at January 21, 2011 01:19 PM (NKTR5)

I thought the same thing but aren't there laws protecting the pension funds and aren't most of the funds heavily invested?

Posted by: curious at January 21, 2011 01:20 PM (p302b)

90 4 How much of the workforce is unionized in this country? I thought I heard somewhere that it was a relatively small amount, like 25% or something. If it is that small, how can they be so powerful as to bankrupt states?
Unionization in the private sector is approx. 7%
Unionization in the public sector is very high, I'll dig around for the stats. The other problem with the unionization of the public sector is that the few jobs that are not unionized, i.e., some management jobs, depend upon having that union contract under them, so that they have to be paid (union max salary) X (management premium) = way off the charts unaffordable for the non-union govt management job.
Recent articles have pointed out that govt workers are paid more than twice what their counterparts in the private sector are paid (teachers, janitors, economists, etc.). Plus nobody in the private sector gets a fully paid, non-taxed pension forever, with free healthcare thrown in. Starting in their early 50's.

Posted by: Boots at January 21, 2011 01:22 PM (neKzn)

91 I guarantee that bankruptcy would have unintended consequences. Such as the bankruptcy judge ordering the Feds to pay the bankrupt state's share of Medicaid.

Posted by: Dr. Heinz Doofensmirtz at January 21, 2011 01:22 PM (d8ZxK)

92 "Anyone fiscaly sane will aggree with you, but the POLITICS point elsewhere, which is the real problem."

This has been going on for decades in the private sector. Pensioners (yes, even union members) are getting 30% of what they were promised after very civilized bankruptcies in court that take years to resolve. The pensioners get used to the idea since it takes so long, which (usually) prevents rioting in the streets, etc. Bankruptcy is a very gentlemanly, papered-over way of screwing people.

Posted by: kathleen at January 21, 2011 01:23 PM (NKTR5)

93 curious, there is ERISA -- which exempts government plans from its requirements. wasn't that clever?

Posted by: kathleen at January 21, 2011 01:24 PM (NKTR5)

94 So what? Put a 100% surtax above a certain amount for revenue earned from a union pension fund state employees.Problem solved.
Hmmmm.........what could possibly go wrong.

Posted by: Slippery Slope at January 21, 2011 01:24 PM (DRXeq)

95 My initial reaction is to support bankruptcy for states, but I do have a concern about the prospect of a Bankruptcy Judge imposing by fiat what the voters of the state have rejected. For example, in the case of California, a bankruptcy judge might be able to reduce pension obligations that are untouchable under federal law. But couldn't the Judge also just blow off CA's cap on property taxes and just order the state to raise taxes on its citizens? No way a BR judge is going to put all of the pain on the public employees--I thinkt they'd feel obligated to impose some of the pain on the taxpayers.
Also Ace, the Voting Rights Act is not a good analogy, as it rests upon an amendment to the US Constitution; an amendment to the Bankruptcy Code would not have this Constitutional underpinning vis a vis the 10th Amendment.

Posted by: right field bleachers at January 21, 2011 01:24 PM (K/USr)

96 The cycle of stupid in all this should drive everyone who has more brain capacity than a dodo (yes, extinct) to fits of rage.
1. Good economic policies lead to boom.
2. Libs institute spendingand welfarepolicies that A) assume the boom will continue forever, B) ignore all human and societal impulses regarding rent-seeking and, most importantlyC) undermine the boom.
3. Inevitably, the welfare policies outstrip the ability of the system to support them because of the feedback/expansion mechanism noted above.
Try this explanation on a lib and they will not refute it. The word "fair" will enter the discussion and they will be blind to point 2B above.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:24 PM (B+qrE)

97 Posted by: Susan at January 21, 2011 12:52 PM (p+8kM)

The stupid is strong in this one.

Posted by: Guy who pays his bills (and feels like a fool for doing it) at January 21, 2011 01:25 PM (LH6ir)

98 95untouchable under federal statelaw
FIFM

Posted by: right field bleachers at January 21, 2011 01:25 PM (K/USr)

99 California declares a fiscal state of emergency, they look into bankruptcy, so what does San Francisco do? They pay out an extra 170 million in bonuses to public workers.

Via drudge

Posted by: Ben at January 21, 2011 01:25 PM (wuv1c)

100 Bankruptcy is a very gentlemanly, papered-over way of screwing people. deciding how many inches of dildo each interested party gets.

Posted by: MīcÞeMūß at January 21, 2011 01:26 PM (0q2P7)

101 >>It's using their tactic of "tax 'em hard until we tax our preferred world into existence" strategem against them.

>>That's kind of brilliant, really.

>>Isn't it?

Yeah, I can't imagine any blowback at all from AFSCME or any of the other public sector unions when we tell them that their pensions are completely worthless. Firefighters, police, EMTs, nurses, etc., etc.. I mean it's not like they could strike back in any way.

What could go wrong?

Posted by: Vinny Carwash at January 21, 2011 01:26 PM (TMB3S)

102 Posted by: Have Blue at January 21, 2011 12:56 PM (mV+es)

What? And ruin my view? Arrest him! Off with his head!

Posted by: Nancy Pelosi at January 21, 2011 01:26 PM (LH6ir)

103 Really? What pension income is taxed at different rates?
Am I allowed to include IRA's and federal TSP in the discussion?

Posted by: Circa (Insert Year Here) at January 21, 2011 01:26 PM (B+qrE)

104 Here is another wrinkle for you:
in NY public employee pensions are written into the state constitution, they are not simply a matter of contract. And they are exempt from state income tax, though not from federal income tax.

Posted by: real joe at January 21, 2011 01:27 PM (IpIBJ)

105 remember, this is all Boooosh's fault.

Posted by: joeindc44 at January 21, 2011 01:27 PM (QxSug)

106 The stupid is strong in this one.

Probably one of those Jersey teachers what can't do math.

Posted by: nickless at January 21, 2011 01:27 PM (MMC8r)

107 So what? Put a 100% surtax above a certain amount for revenue earned from a union pension fund state employees.

Problem solved.
There's a slight problem with this. Due to a Supreme Court case a while back, retirees from a state need not file tax returns in that state if they live elsewhere, as their pension payments aren't in-state revenue. This is, BTW, one reason my dad lives in Oregon off of his LA pension.
So letting them retire and thinking you can get it back then is a nonstarter.
Now, on the other hand, eliminating the tax exemption for the value of defined-benefit plans....

Posted by: cthulhu at January 21, 2011 01:28 PM (kaalw)

108 Looks like the chickenssss .... are comin' home to roost.

Posted by: Andy at January 21, 2011 01:28 PM (5Rurq)

109 Posted by: garrett at January 21, 2011 01:04 PM (GZb/c)

Ace has been very polite and patient; asking that we refrain from profanity. Try to get on board.

Posted by: Nancy Pelosi at January 21, 2011 01:28 PM (LH6ir)

110 16 Here's a plan: Allow whatever states that want to declare bankruptcy to do so, but strip them of their congressional representation.
that would require a Constitutional Amendment

Posted by: right field bleachers at January 21, 2011 01:28 PM (K/USr)

111 #82

You do raise a good point.

The States can just say "we're not paying our debts, F you".

The problem is a political one, not a legal one.

The problem is that the Unions, which control the bankrupt states, aren't going to allow their debts to go unpaid (or partly unpaid).

Frankly, I don't see any way around this problem. No matter how the debt ultimately gets restructured, so long as State politicians in these bankrupt states have ANY say over how the money gets spent, its going to go to pay off unions as top priority.




Posted by: looking closely at January 21, 2011 01:28 PM (6Q9g2)

112 Damn mafia sock

Posted by: JackStraw at January 21, 2011 01:29 PM (TMB3S)

113 The state pension overhang is big no matter how you slice it.
Cali, Illinois, New Yawk are just the worst cases. Almost every state has a problem.
Even ifpension payoutswere cut by 50%, it's still TOO MUCH. Most of them are still promised medical coverage. Dump them all into Medicare?
Even if the economy were to grow by 4-5% annually and the DJIA were to go to 20,000, it's still TOO MUCH to finance.
They will tax our 401K's and IRA's, and it still willNOT be ENOUGH.
There will be blood in the streets before this is over.

Posted by: Reader C.J. Burch writes... at January 21, 2011 01:29 PM (usS2T)

114 IMO, the states can already default on their debts, and have done so before. As to the constitutionality of states declaring bankruptcy, I don't see the need for Federal involvement. Per the 10th, any rights not specifically granted to the Feds belong to the states and the people.

Posted by: Vashta Nerada at January 21, 2011 01:29 PM (0Jb7F)

115 Bankruptcy courts are federal jurisdictions

Posted by: kathleen at January 21, 2011 01:30 PM (NKTR5)

116 More good news via Hotair, Huckabee leads by 10 in most recent poll

Posted by: Ben at January 21, 2011 01:31 PM (wuv1c)

117 Romeo13 nailed it: If you want to know what will happen if states are allowed to go bankrupt, GM offers a precedent. Liberals/Dems and Obama will protect the interests of union members. Politicians and govt employees will remain at their current salaries. Private investors (holders of the state's bonds) will be shut out, or recover pennies on the dollar, EXCEPT union pension funds and one or two favored brokerage firms--there'll be a special exemption for them that protects the full value of their holdings.

And yeah, I'm curious as to who posted this with Ace's name. Ace, you can't possibly seriously suggest that even the most liberal-dominated state should be required to submit spending proposals to the feds as a condition of declaring bankruptcy. Because two seconds later the feds will assert the same power over ALL states (as I would think you'd agree) under a bogus "fairness" rationale.

Of course Dem congresswhores will fight tooth and nail to pour your federal tax bucks into horribly (Democrat) managed States, and the usual crowd of RINOs will probably go along. Cuz it's for the children, y'know. But I think the soundest position by far is for the feds to stay the hell out of state problems.

As long as the state doesn't break federal laws, it ought to have a free hand otherwise in organizing its financial house.

Posted by: sf at January 21, 2011 01:31 PM (eSMQV)

118 Federal agencies overseeing state tax and spend policies? What happened to federalism?

Leaving that aside, do you honestly expect better policy from federal bureaucrats? Really?

Like someone else said, the doomsday types that have been wailing about sovereign debt default and the collapse of the muni-bond market are starting to look pretty smart right about now.

Not a pretty picture.

Posted by: Fred at January 21, 2011 01:31 PM (xWGQr)

119 LA 911: 911, where's your emergency? ring ring......ring ring......ring ring.......an hour later.......ring ring......Resident: My house has been set on fire and an illegal is raping my Grandmother. Help Help! We're boned!LA 911: Hold on. ring ring......ring ring.................

Closer to the truth my friend.

Posted by: Roadking at January 21, 2011 01:31 PM (DRXeq)

120 Posted by: Kemp at January 21, 2011 01:15 PM (JpFM9)

I think you have described a very plausible scenario.

I hate you.

Posted by: CharlieBrown'sDildo (NJConservative) at January 21, 2011 01:32 PM (LH6ir)

121 More good news via Hotair, Huckabee leads by 10 in most recent poll
Not. Going. To. Happen.
Next.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:33 PM (B+qrE)

122 Am I allowed to include IRA's and federal TSP in the discussion?

Posted by: Circa (Insert Year Here) at January 21, 2011 01:26 PM (B+qrE)

Are they pensions?

Posted by: Rocks at January 21, 2011 01:33 PM (Q1lie)

123 Wasn't there a movie where scientists places nuclear bombs all aloung the fault line dividing california from the rest of america and then detonated those fault lines pushing it into the sea?
That might be more politically palatable than cutting back pensions for public unions

Posted by: Ben at January 21, 2011 01:33 PM (wuv1c)

124 More good news via Hotair, Huckabee leads by 10 in most recent poll
Not. Going. To. Happen.
Next.
Circa, i want to agree with you, but this man must have a die hard contingent of followers. By all accounts he shouldn't even by a viable candidate, yet he still garners support.

Posted by: Ben at January 21, 2011 01:34 PM (wuv1c)

125 Before you say "They should be forced to live with their debt," remember
(as I failed to) that the states have made contractual obligations to,
for example, their unions' pension funds, and states are
constitutionally barred from canceling/modifying their contracts. As
things stand. (If I have this right: they're so barred by their own
constitutions. See the link at the bottom of the post.)
If a state *has* to honor a contract and has no money, there are only two options - sell assets, which is probably impractical in the real world, or raise taxes. We seem to have a rock and a hard place here.

Corrupt contracts negotiated by the flunkies of the unions versus the notion of no taxation without representation. - the foundational notion of our government.

Posted by: 18-1 at January 21, 2011 01:35 PM (bgcml)

126
You don't need a crystal ball to see that the pensioned fireman who was disabled while rescuing kids from a burning orphanage will have his picture on every "news" program in creation. The politicians proposing these changes will fold like a tent in a hurricane.

However, I have to say that there's a rough justice in the "punitive taxation" model - and I speak as a resident of Illinois who's already going to be getting up the heinie. H. L. Mencken defined democracy as "the theory of government that states that the people know what they want and deserve to get it, good and hard." Well, we voted for these jerks time after time, and we ignored our civic responsibility to keep them on a short leash; so in fact we deserve to get it, good and hard. And will we ever!



Posted by: Brown Line at January 21, 2011 01:36 PM (VrNoa)

127 But couldn't the Judge also just blow off CA's cap on property taxes and just order the state to raise taxes on its citizens?

Thanks to the fact that the State in incorporated, acts as a limit to it's liability. The State's liabilities, cannot, by law be passed on to the Citizens. Anymore than a corporations liabilities can be passed on to the shareholders in bankruptcy. A judge at the federal or state level cannot force the State to tax against the Constitution of the State. What's a Judge gonna do?JUDGE: I order you to raise taxes. The people: (via ballot initiative) NO! JUDGE: Uh well, never mind.

Posted by: MīcÞeMūß at January 21, 2011 01:36 PM (0q2P7)

128 They pay out an extra 170 million in bonuses to public workers

170 million in bonuses. Keep in mind that for all the press it gets, San Francisco is not a big city. Third biggest just in the Bay Area.

Posted by: t-bird at January 21, 2011 01:36 PM (FcR7P)

129 If Illinois sells off their assets, I'll bid on some Mount Prospect police cruisers. I'm on a mission from Allah.

Posted by: Big Fat Meanie at January 21, 2011 01:37 PM (3iMgs)

130 Wasn't there a movie where scientists places nuclear bombs all aloung the fault line dividing california from the rest of america and then detonated those fault lines pushing it into the sea?
That sounds awesome!!!11!
Oh shit didI say that out loud?
Uhhh..........I gotta go.

Posted by: The State of Illinois at January 21, 2011 01:37 PM (DRXeq)

131

It's using their tactic of "tax 'em hard until we tax our preferred world into existence" strategem against them.
That's kind of brilliant, really.
Isn't it?
I imagine we'd finally see liberals coming around to the notion that the power to tax is the power to destroy.

Posted by: 18-1 at January 21, 2011 01:37 PM (bgcml)

132 There really is only one way out sans bankruptcy, but we all know it won't happen.

Cut spending to the bone and I mean everything, mass state govt layoffs, end social programs, sell govt property, amendments to constitutions for no new debt, etc.

Or the states could just default and fight in court for decades until creditors settle, which would have the same effect. Just as well.

Posted by: Guy Fawkes at January 21, 2011 01:37 PM (xdHzq)

133 Are they pensions?
Semantics.
And there lies the danger. How rapacious and acquisitive would the various state governments be? Look at Illinois' latest actions for an example: 67% bump in income tax and they still had to borrow funds to pay pensions.
The fundamental problem is what I described above--the lefties are stuck on intential stupid becasue if they admit that their economic assumptions are wrong, the game is up.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:38 PM (B+qrE)

134 Firefighters, police, EMTs, nurses, etc., etc.. I mean it's not like they could strike back in any way.
Why should I care? I don't use their services and if I did I could get them from a non-union EMT. This threat they hold over us is not quite what they think it is. And you know what I think a good salary for a striking cop is? Fuck-all, that seems about right. Go ahead and strike--feed your family stale donuts.

Posted by: spongeworthy at January 21, 2011 01:38 PM (rplL3)

135 117 As long as the state doesn't break federal laws, it ought to have a free
hand otherwise in organizing its financial house.

I agree, in theory. It would be nice for Uncle Sam to wash its hands of CA, NY, IL, etc, and let them sleep in the beds they've made for themselves. In practice, I don't think its going to work that way.

Its inevitable that the States are going to look for Fed bailouts.

If multiple State gov'ts have to shut down and can't provide basic State services (including, for example law enforcement) there is going to be a strong impetus for the Feds to step in.




Posted by: looking closely at January 21, 2011 01:39 PM (PwGfd)

136 It dosen't matter whether they are allowed to declare BK or not, they are still bankrupt. Regardless of whether or not the court makes it easier for them they still can't pay their bills. They will have to face that harsh reality and start cutting, renegotiating and taxing. All of which will maybe finally end the careers of the retards that got them into the mess.

Posted by: robtr at January 21, 2011 01:39 PM (hVDig)

137 ***Frankly, I don't see any way around this problem. No matter how the debt ultimately gets restructured, so long as State politicians in these bankrupt states have ANY say over how the money gets spent, its going to go to pay off unions as top priority. ***

I agree, there is no realistic solution.

Unions and their minions will never give up power.

Other states will hopefully never bailout these fucks.

We have to be careful for a repeat of the 111th congress, a few gay GOP congressmen here, a media created messiah there, and boom, the democrats accidentally get control of both the executive and legislative branch and give away the farm.

I see it getting real bad, the states can't pay their bills, get cranky, union thugs send their thugs to protest at houses of people who won't go along. Civil War.

Posted by: joeindc44 at January 21, 2011 01:39 PM (QxSug)

138 Re: Tax em hard:

It's even better than you said, Ace. Since the Union workers could possible run afoul of the AMT, and so have to pay Federal Income tax on the money that was taxed from them by the State. :-)

Unions delenda est

Posted by: Greg at January 21, 2011 01:39 PM (4Pleu)

139 What's a Judge gonna do?JUDGE: I order you to raise taxes.
This has happened in education districts all over the country.

Posted by: Circa (Insert Year Here) at January 21, 2011 01:39 PM (B+qrE)

140 btw, how can it be that a govt worker can earn a bonus? bonuses are for production, ie, bringing in more money to the employer. Govt workers are all on the cost side of the ledger.

Posted by: Guy Fawkes at January 21, 2011 01:41 PM (xdHzq)

141 Liberal governors of liberal states will have to ream out liberal constituencies to escape the problems caused by liberal policies.
Am I the only one picturing Wile E.Coyote, having jumped on a board to launch an anvil, watching in horror and disbelief as the anvil drifts over his head as it descends?

Posted by: Jay Guevara at January 21, 2011 01:42 PM (cRQc+)

142 Posted by: t-bird at January 21, 2011 01:36 PM (FcR7P)

One of the reasons I stopped enjoying San Francisco so much, even while I lived in the East Bay, was exactly that attitude.

"We get to play with the big boys! Look at us!"

The fucking cocksuckers couldn't keep the streets clean or keep Union Square free of bums pissing on each other. But they thought they were a big city!

Posted by: CharlieBrown'sDildo (NJConservative) at January 21, 2011 01:42 PM (LH6ir)

143 Posted by: MīcÞeMūß at January 21, 2011 01:36 PM (0q2P7)
Except that the Courts have already taken Jurisdiction over many of the Constitutional State perogitives...
Like Gay Marriage out in California.
Annnddddd... since the Fed Constitution says that they can Tax any income, no matter how derived, and its under the Jurisdiction of Congress, not the People (as California has it), they will just order Prop 13 as null, and raise taxes.
Remeber, we're talking about people who will use ANY pretext, no matter how illogiacal or flimsy, to get their way... Constitutions be damned..

Posted by: Romeo13 at January 21, 2011 01:42 PM (AdK6a)

144 Even if the bankruptcy laws are changed, states are allowed to claim, debts get erased, the problem remains that the same exact people who created this mess, are still in office.

Letting a state bankrupt, doesn't change the liberal mindset. Especially the liberal voter mindset that lives, breathes, and dies with the State as mommy and daddy.

These assholes will look at this as having their credit card balance wiped so they can start spending again from zero.

There needs to be some massively heinous stigma attached to this, like we're revoking your damned statehood and making your asses wards of the fed until you've proven you can balance a damned budget heinous.

Makes me physically ill to think this country managed to get here in this short a period of time.

Posted by: Unclefacts, Confuse A Cat, Ltd at January 21, 2011 01:42 PM (eCAn3)

145 Circa, i want to agree with you, but this man must have a die hard contingent of followers. By all accounts he shouldn't even by a viable candidate, yet he still garners support.

Posted by: Ben at January 21, 2011 01:34 PM (wuv1c)

Worse than that he appears to be the candidate that the MSM wants Obama to run against (much as McCain was in 200.

That's another reason for him to get gone and fast.

Posted by: Nighthawk at January 21, 2011 01:43 PM (02uN6)

146 #82, we'll start with the fact that the several States have not been sovereign entities since 1865, and were made so at the point of Abraham Lincoln's half-million bayonets. They are administrative fiefdoms of the central government, and nothing more.
My main gripe is that states in better shape, like my adopted home of Tennessee and Texas, will be pillaged to fund those in worse shape.
Personally, I'd rather donate some more cash to the Texas Independence folks and try to find a lifeboat off this wreck before the water reaches the main deck.

Posted by: SGT Dan at January 21, 2011 01:43 PM (QUuUE)

147 132
There really is only one way out sans bankruptcy, but we all know it
won't happen.

Actually, I think at a Federal level, massive inflation could also fix much of this (or at least help signficantly) by eroding the values of fixed benefit retirement plans down to a nub.

Of course that also screws EVERYONE else with savings, but I don't think that by itself would prevent it from happening.


Posted by: looking closely at January 21, 2011 01:43 PM (PwGfd)

148 Too lazy to read through all comments, but:
Wouldn't "aggressive measures" include general tax hikes? Won't legislators be all too happy to hide behind the judge's robes?

Posted by: mrobvious at January 21, 2011 01:44 PM (G7Jng)

149 Looks like someone screwed the pooch on a post. The main page is down.

Posted by: Quilly Mammoth at January 21, 2011 01:44 PM (rdtls)

150 You know what Illinois needs? Monorail. MONORAIL! MONORAIL11!!

Posted by: Lyle Lanley at January 21, 2011 01:44 PM (3iMgs)

151 Main page is dead for me

Parse error: syntax error, unexpected '<' in /home/ace/public_html/skins/1/3c-body.php on line 36

Posted by: toby928™ at January 21, 2011 01:45 PM (S5YRY)

152 A judge at the federal or state level cannot force the State to tax
against the Constitution of the State. What's a Judge gonna do?JUDGE: I
order you to raise taxes. The people: (via ballot initiative) NO! JUDGE:
Uh well, never mind.

Yes, it is unconstitutional as hell, but a federal judge did that very thing in Kansas City years ago and it stuck.

In the last 75 years since FDR packed the courts the Constitution has become a worthless piece of dead animal skin.

Posted by: Vic at January 21, 2011 01:46 PM (M9Ie6)

153 You know what Illinois needs? Monorail. MONORAIL! MONORAIL11!!
I will forever love Conan O'Brien solely because he wrote that episode.
Also, didn't detroit just try the monorail?

Posted by: Ben at January 21, 2011 01:46 PM (wuv1c)

154 The problem with the confiscatory tax rate I think would be that retirees would relocate to a different state. The states would then be unable to recoup the money in state taxes.

Posted by: Laughing in Texas at January 21, 2011 01:46 PM (dL9LY)

155 There needs to be some massively heinous stigma attached to this, like we're revoking your damned statehood and making your asses wards of the fed until you've proven you can balance a damned budget heinous.
I admire your passion and agree in principal but "wards of the feds" on spending issues wreaks of "hey fox, please look after this chicken" to me.

Posted by: Roadking at January 21, 2011 01:46 PM (DRXeq)

156 in NY public employee pensions are written into the state constitution, they are not simply a matter of contract. And they are exempt from state income tax, though not from federal income tax.
Posted by: real joe at January 21, 2011 01:27 PM (IpIBJ)
So much for equal protection and tax rates.

Posted by: Merovign, Bond Villain at January 21, 2011 01:46 PM (bxiXv)

157
Meanwhile...

CA legislators make $95K+/yr for their public service to the community.

The 2-chambered CA legislative body is comprised of a 80 member Assembly and 40 member Senate. Here are some figures on the staff for the 120 'public servants:'

"The total payroll for the employees of the California
Legislature is slightly more than $129.3 million, and the average pay
for 2,054 legislative workers is about $63,000 a year, according to
legislative data analyzed by
Capitol Weekly."

$130M is a relatively small amount in comparison to CA's debt. But it shows you how these public servants are raiding the treasury and spending money like it grows on trees.

Posted by: Everyone Wang Dong Tonight at January 21, 2011 01:46 PM (uFokq)

158 >>Why should I care? I don't use their services and if I did I could get them from a non-union EMT.

You've got to be joking. You don't use the police? Fine, let the go on strike in say LA. How long before LA turns into Thunderdome? You think that would stay contained in just the LA city limits?

And they won't go hungry. AFSCME spans every state in the nation and union funds would be syphoned off to support them. Happens in private union situations like IBEW all the time.

I'm not saying all public sector union personnel are necessary or provide any value but they are all part of the union brotherhood and shutting them down in one area will cause massive ripples across the board. Hell, trash strikes have brought major cities to their knees. Telling ALL union employees state wide that their pensions are gone would have disastrous affects for everyone.

Posted by: JackStraw at January 21, 2011 01:46 PM (TMB3S)

159 Commercial contracts with States all carry "appropriations Risk", ie, the recognition that the state cannot contract to pay money for more than the appropriation year year then in effect. In my company's case, we license software to states and collect annual support fees. Every year each state must receive legislative budget approval for that year's "obligation" owed to us, and if they do not get it we only have the option of pulling the software. We cannot sue them for an unpaid "debt" as we would for a private company user of our software.

Are pension obligations special somehow? I was told that ALL state obligations carry appropriation risk.

If so, then just don't pay the pensions.

Posted by: MTF at January 21, 2011 01:48 PM (uEAOf)

160 If you want to know what will happen...

I know what exactly will happen. And it is much like you say. But given that.

A. There exists insufficient political leverage now, or in the foreseeable future, (Disabled, retired firefighters and police commercials 24/7) to substantially stiff union pensions.
and
B. People will just keep loaning money to the State so long as they see no risk in doing so.

It leaves us with three choices.
1. Pay more in taxes to government.
2. Go deeper into debt.
3. Declare bankruptcy and force austerity through loss of credit. (And just maybe we can get an 80¢ on the dollar deal with pensions, everyone else, 0.5¢ on the dollar.

Three is looking more attractive all the time.

Posted by: MīcÞeMūß at January 21, 2011 01:48 PM (0q2P7)

161
139 What's a Judge gonna do?JUDGE: I order you to raise taxes. This has happened in education districts all over the country.
YUP. the unions won't be the only ones who take it in the shorts. So will taxpayers in the BR states. But maybe that isn't a bad thing? After all, they keep electing socialists. Its a can of worms. the more I think about it, the less I like the Bankruptcy idea.

Posted by: right field bleachers at January 21, 2011 01:48 PM (K/USr)

162 #148

The states that are bankrupt already have nearly the highest tax rates in the country.

There is only so much juice you can squeeze out of an orange; raising tax rates more may increase revenues slightly, but they're already probably at the point of diminishing returns and it may not.

Higher taxes will only depress their economies further, which makes the fundamental problem worse.


Posted by: looking closely at January 21, 2011 01:49 PM (6Q9g2)

163 If the Federal Reserve (you, actually) doesn't bail out the states (really the banks), a default or bankruptcy is the same thing. They will not be able to get more credit and will end the spending one way or another.

Then again, China is bailing out Spain and Portugal, so there is always that.

Posted by: Guy Fawkes at January 21, 2011 01:50 PM (xdHzq)

164
I admire your passion and agree in principal but
"wards of the feds" on spending issues wreaks of "hey fox, please look
after this chicken" to me.



Posted by: Roadking at January 21, 2011 01:46 PM (DRXeq)

I'm not real happy about it either, however, you're asking ultimately for the entire country to pay the bills of the states that can't seem to handle their finances properly. I think the ones who are going to end up bailing these cocksuckers out, ought to have some say it in it, even if it's symbolic. Making the defaulting states basically wards of the state because they're a bunch of fiscally retarded criminals may make the bailout more palatable.

Posted by: Unclefacts, Confuse A Cat, Ltd at January 21, 2011 01:50 PM (eCAn3)

165 How long before LA turns into Thunderdome? You think that would stay contained in just the LA city limits?

That would be the best thing that could happen to CA.

Posted by: Vic at January 21, 2011 01:50 PM (M9Ie6)

166 How to Unbone California

(1) End the use of any State funds to support illegal aliens. $30 billion a year saved.

(2) Embrace the fact that the view of an offshore oil platform from your beachfront property isn't so bad when you realize the rent the State collects on it protects you from a fiscal apocalypse. As an added bonus, the increased oil production might reduce your dependence on the Saudis while filling the tank of your BMW for less than $3.00 a gallon for a change.

(3) Half of the State budget is presently flushed down the porcelain bowl of the second-worst schools in this dimension. Cut your losses - you're not getting any return on this investment anyway.

(4) Public employee unions? Public enemy number one. They're bleeding you dry. Lose them.

(5) The Delta smelt is going to have to fend for itself. Inland water is for growing crops, making sweet tea, and for you hippies, the occasional shower.

(6) There is no reason on God's green Earth why running this state requires a bureaucracy of a quarter million civil service slugs. The payroll needs to go on a diet, and your goal by the end of the year is 100,000.

(7) While we're at it, the government has more unneeded, outdated bureaus than the warehouse at Levitz Furniture. You need to have either a garage sale or a fire sale.

( Government is not going to save California's economy - private business is, by being productive and creating jobs. Get the hell out of the way of business owners and let them do what they do best.

My fellow morons are welcome to add to this list. You may fire at will.

Posted by: Keith Arnold at January 21, 2011 01:50 PM (Jdtsu)

167 Now... if we could just get a GOOD Judge for California...
California HAS lots of fungible assets... oil, gas, rare earths, minerals... but its own State Rules and Regs stop people from using those assets...
So... just get the Judge to overturn those rules? And Drill, and MINE, Baby...

Posted by: Romeo13 at January 21, 2011 01:52 PM (AdK6a)

168 I have a solution. Allow them to declare bankruptcy and have a special court set up for it. The bankruptcy judges would be a 5 member panel made up of experienced financial people from States that with the least public debt.

Posted by: Vic at January 21, 2011 01:52 PM (M9Ie6)

169 Thanks, Ace. It's of a piece with my "single-payer for lawyers" idea. Use their tactics against stuff they like, especially when it's popular.

If you say that a pension negotiated by the state government can only yield x amount before it's confiscatorially taxed and x is higher than most people are getting, they're going to be all for it.

In general, conservatives need more judo lessons.

Posted by: AmishDude at January 21, 2011 01:52 PM (T0NGe)

170 The 100% pension tax is Mish's idea from globaleconomicanalysis@blogspot DOT com

And yes, it's brilliant.

Posted by: Warden at January 21, 2011 01:53 PM (V6HDd)

171 As usual, venders will get screwed while the state and city workers pay and retirement will take no or very little hits at all.

Posted by: moi at January 21, 2011 01:53 PM (Ez4Ql)

172 165
How long before LA turns into Thunderdome? You think that would stay contained in just the LA city limits?

That would be the best thing that could happen to CA.


Posted by: Vic at January 21, 2011 01:50 PM (M9Ie6)

Yeah, I'm sitting here trying to think of a downside to this scenario.


nope, can't do it. WELCOME... TO THUNDERDOME!

Posted by: Unclefacts, Confuse A Cat, Ltd at January 21, 2011 01:53 PM (eCAn3)

173 Semantics.Posted by: Circa (Insert Year Here) at January 21, 2011 01:38 PM (B+qrE)

Semantics is how lawyers make a living. Any law you pass related to taxing pensions income in a state is going to apply to all pension income earned in that state. End of story. Anything else would be discriminating against public pensioners over private pensioners.

Now for most cases this would be fine anyway because most of the people earning this excess income will be former civil employees. But not all.

Posted by: Rocks at January 21, 2011 01:54 PM (Q1lie)

174 Break a Deal, Spin the Wheel.

Posted by: toby928™ at January 21, 2011 01:55 PM (S5YRY)

175 Also, didn't Detroit just try the monorail?
Florida is trying hard to get a high-speed rail project crammed through between O'town and Tampa. Negotiations were disrupted for a while when lawyers wanted to be assured that they would have fertile legal grounds for lawsuits against anyone they could find to sue, adding substantially to the cost to taxpayers. I'm not against this project, but I don't want tax money being spent for it. None. Let the businesses that will profit from it pay for it. This is much like a rich sports team's owner wanting the city to build an arena they can profit from without paying for the facility.
This, in addition to developing a technology that is slower than existing transportation methods (ie, those flying thingys), is a major result of stoopid on the part of "leaders" down here.

Posted by: BackwardsBoy at January 21, 2011 01:55 PM (b6qrg)

176 How long before LA turns into Thunderdome?
It wouldn't have to, but why would I care if it did? Reagan fired the ATC's and no planes fell out of the sky, not one. The obvious solution in L.A. would be to hire a new batch of cops. In my town, we could go without for a while.
And nobody's seriously talking about zero-ing out their pensions anyway. Convert them to defined contribution plans like the rest of us. Let's see them tug at heartstrings for being forced to save for retirement like the rest of us.

Posted by: spongeworthy at January 21, 2011 01:57 PM (rplL3)

177 I really don't have a realistic solution, other than Keith Arnold for Governor!!!

Posted by: Guy Fawkes at January 21, 2011 01:58 PM (xdHzq)

178 Keith Arnold, I would have voted for you. And you would have gotten absolutely creamed, sadly.

Posted by: t-bird at January 21, 2011 01:58 PM (FcR7P)

179 A lot of NYer's want to leave and go to other states. They can't, they can't sell their house for enough to cover their mortgages. So essentially the population, unless you walk away, is trapped by the housing crisis. Geez, you couldn't write this if you tried and, if you saw it in the movies, you wouldn't believe it and yet, we are living it.

Posted by: curious at January 21, 2011 01:59 PM (p302b)

180 170
The 100% pension tax is Mish's idea from globaleconomicanalysis@blogspot DOT com

And yes, it's brilliant.


Posted by: Warden at January 21, 2011 01:53 PM (V6HDd)
For the record, I hadn't heard it. I don't visit that blog and I don't follow economic circles.

Posted by: AmishDude at January 21, 2011 01:59 PM (T0NGe)

181 My fellow morons are welcome to add to this list. You may fire at will.
Sorry, logic and common sense are not permitted when addressing governmental fiscal problems. As are simplemathematic principles such as addition and subtraction.

Posted by: BackwardsBoy at January 21, 2011 02:01 PM (b6qrg)

182 While no bailouts is a good step, there needs to be a proactive step of forbidding the federal government from buying state bonds.

These blue states are fortresses of stupid, they will do what they do...smugly...until they can't.

I wonder if the rest of the country has the guts to not bail these fuckers out. Just think of your stupid IRA and some tax-payer pension with all the bells and whistles. makes me mad everytime.

Posted by: joeindc44 at January 21, 2011 02:02 PM (QxSug)

183 Here is the headline from the NYT a year ago, on Jan 22, 2010. I'll try and get tiny url to work but links are my weak link.

"Most U.S. Union Workers Are Now Working For The Government"
For the first time in American history, a majority of union members are government workers rather than private-sector employees, the Bureau of Labor Statistics announced on Friday.
In its annual report on union membership, the bureau undercut the longstanding notion that union members are overwhelmingly blue-collar factory workers. It found that membership fell so fast in the private sector in 2009 that the 7.9 million unionized public-sector workers easily outnumbered those in the private sector, where labor’s ranks shrank to 7.4 million, from 8.2 million in 2008...
According to the labor bureau, 7.2 percent of private-sector workers were union members last year, down from 7.6 percent the previous year...Among government workers, union membership grew to 37.4 percent last year, from 36.8 percent in 2008...
Notwithstanding the recession, government employment grew last year, inching up 16,000, to 22,516,000, according to the bureau.
Fred Siegel, a visiting professor of history at St. Francis College in Brooklyn and a senior fellow at the Manhattan Institute, a conservative research organization, said, “There were enormous political ramifications” to the fact that public-sector workers are now the majority in organized labor.
“At the same time the country is being squeezed, public-sector unions are a rising political force in the Democratic Party,” he said. “They depend on extra money for the public sector, and that puts the Democrats in a difficult position. In four big states — New York, New Jersey, Illinois and California — the public-sector unions have largely been untouched by the economic downturn. In those states, you have an impeding clash between the public-sector unions and the public at large.”

Posted by: Boots at January 21, 2011 02:02 PM (neKzn)

184 oh that's good, at least the blue staters are stuck in their states because of mortgage meltdown.

Posted by: joeindc44 at January 21, 2011 02:02 PM (QxSug)

185 I'm guessing state and federal assets, like land, will be finding their way into union hands. Hey, it's only fair!

There's going to be some nice new houses in The Presidio for some union leaders.

Posted by: t-bird at January 21, 2011 02:02 PM (FcR7P)

186 Ace: "On the other hand, this seems likely to produce a crisis of confidence.
But then, I think we're already living in a crisis of confidence..."

No question. At this point it's just weighing the moral hazards of bad options and the limiting future damage. A lot of people have to get screwed on this. It's only the politics of determining who. More confidence will arise if the (little-r) "right" people lose the most.

Posted by: AnonymousDrivel at January 21, 2011 02:05 PM (swuwV)

187 Any law you pass related to taxing pensions income in a state is going
to apply to all pension income earned in that state. End of story.
Anything else would be discriminating against public pensioners over
private pensioners.

Who cares? Try it anyway. Let the courts slap it down. Try to find ways around it, try to invalidate the contracts. Let the courts slap it down.

The problem with conservatives is that we don't think about politics. This is politics, get the outrageous union pensions out in the open. Get people mad at the unions. Make them place the blame where it belongs.

Look at the Obamacare repeal vote. The damned thing wasn't going to be repealed. It doesn't matter, it was good politics.

Posted by: AmishDude at January 21, 2011 02:05 PM (T0NGe)

188 Here is the link to the NYT article referenced in 183 above:
http://tinyurl.com/4amage4

Posted by: Boots at January 21, 2011 02:05 PM (neKzn)

189 >>It wouldn't have to, but why would I care if it did? Reagan fired the ATC's and no planes fell out of the sky, not one. The obvious solution in L.A. would be to hire a new batch of cops. In my town, we could go without for a while.

Unlike air travel which can be regulated, cancel flights to meet workload, crime doesn't work on a schedule. Nor does fire. Nor does emergency medical services. And it wouldn't be confined to any one city. AFSME and the like has been gearing up for this for sometime. Go take a look at their website. They know the battle that's coming.

It doesn't matter how much is taken. Any amount that is just taken by a confiscatory tax rate while been seen, rightly, as retroactively breaking a contract. If that can be done then who will ever believe in a state employment contract or collective bargained agreements?

Christie is providing a model of how to make this work. The unions have to be put on notice that they can either proactively step up and renegoiate their contracts downward and take some pain or face a lot more pain down the road.

Posted by: JackStraw at January 21, 2011 02:08 PM (TMB3S)

190 This has happened in education districts all over the country.

There is several orders of magnitude of difference between the Sovereignty of a school district and the Sovereignty of a State when it comes to taxation.

Posted by: MīcÞeMūß at January 21, 2011 02:08 PM (0q2P7)

191 It's time for some other states to similarly have pieces of their sovereignty withdrawn.

Ugh. I think I just threw up a little in my mouth. Is conservative just a comfortable hat you wear sometimes when it's convenient?

How is it in any way okay to adopt the Left's habit of looking at us all as mental defectives or children that need to be controlled? How is the fact that state's rights have been violated in the past make future violations morally permissible? I'm not sure the answer is ever to further fuck with the structure of the republic.

Fuck slippery slope. You just jumped out the plane with no parachute.

Allow the state's to renegotiate contracts as any private citizen would when he goes bankrupt. Allow them to ban public unions. If they are unwilling or unable to take those steps you let them fail. In no way is letting the federal government usurp more authority permissible.

States' rights, you might object. Well, yes, but

There is no "but". Any "but" you put in there betrays the Founders and Conservatism. Any "but" furthers the goals of the Cloward-Piven crowd. Any "but" strips us of liberty.

Posted by: Chicago Jedi at January 21, 2011 02:08 PM (6ftzF)

192 You know what??? When a business declares bankruptcy, it often times ends up with said business going away. If not, they usually have to change the way they do business or they go tits up anyway.

What's going to happen, is a state, let's say..California... will declare bankruptcy. They will equally fuck over everyone holding their debt. Wooo...dodged a bullet there...

....and they won't change a goddamned thing about how they do business...in fact, I'll bet they double down on the bullshit because they got their head above water for another few years.

Look at GM...They'll be back begging for money within 5 years....count on it.

Fuck every last one of these pricks....swirl down the spout assholes.

Posted by: Portnoy at January 21, 2011 02:09 PM (azgo2)

193 O/T: Just watched the guy on CNBC finally tell the truth about our job losses and it seems, having watched him that business has redistributed our wealth by redistributing out job to factories overseas. He said 12 million jobs were gone and then amazingly 12 million jobs pop up overseas. It all goes back to billy and his NAFTA

Posted by: curious at January 21, 2011 02:09 PM (p302b)

194 Posted by: AmishDude at January 21, 2011 02:05 PM (T0NGe)

And you think passing a law raising taxes is good politics for Republicans?
If you want to reduce a pension you reduce what you paying out. If you wait till after it's paid out now you have a whole new set of problems.

Posted by: Rocks at January 21, 2011 02:09 PM (Q1lie)

195 Guy Fawkes and T-Bird: thanks for the votes - of confidence, at least. Yes, I would have gotten creamed, but I console myself that there would have been no Reagan without Nixon, and no Nixon without Goldwater. I would have lost, but deep in your heart, you'd know I'm right. For the time being, I'll settle for doing my part in the Browncoat Rebellion.

May be the losing side; still not convinced it's the wrong one.

Posted by: Keith Arnold at January 21, 2011 02:10 PM (Jdtsu)

196 Posted by: JackStraw at January 21, 2011 02:08 PM (TMB3S)

Christie is making a lot of money having his state troopers stop people with license plates from other states for little know traffic laws and charging them a hundred bucks. He has to know this is going on yet he says he wants to develop Atlantic City. three of my friends have gotten the same ticket in as many months and all three vowed to not go to Atlantic City again and everyone they told was so mad they aren't going either. so maybe they get their revenue from out of staters but the unfair tickets leave enough of a bad taste for people to say f**k jersey, I'll go to the Connecticut casinos instead.

Posted by: curious at January 21, 2011 02:13 PM (p302b)

197 Be careful. You can't just start, as conservatives, start saying let's take away state sovereignty. Think about it.
These states are in an awful place. There may come a day when they learn to value economic reality but what we do to California they can do to Kansas.
Things are going to continue boning along for a while.

Posted by: joeindc44 at January 21, 2011 02:13 PM (QxSug)

198 "Any state which seeks these bankruptcy protections (should they come to
pass) should, for decades, until they prove themselves, be required to
pre-clear all tax and spending initiatives with some federal agency."

Te-hee, Pffft. Bwahahahahaha. What like Obama and the Democrats of 2008? Yeah, with a state controlled Democrat legislature they'll end up right back where they started.

If states seek bankruptcy, in order to issue debt in the future they will have to pay Greece-like rates and create some type of super-senior credit guarantee.

Posted by: Marcus at January 21, 2011 02:13 PM (CHrmZ)

199 Don't blame NAFTA, jobs go overseas because they're more business friendly.

Posted by: joeindc44 at January 21, 2011 02:14 PM (QxSug)

200 199
Don't blame NAFTA, jobs go overseas because they're more business friendly.

Posted by: joeindc44 at January 21, 2011 02:14 PM (QxSug)
It's hard for the American worker to compete with slave labor

Posted by: curious at January 21, 2011 02:15 PM (p302b)

201 let's not devolve into a nafta debate, I'll just say that cheap labor is one thing, taxing sugar so that candy companies move to Canada is another, for one example.

Posted by: joeindc44 at January 21, 2011 02:25 PM (QxSug)

202 That's kind of brilliant, really.

Isn't it?

Of course.... He's not an attorney.

Posted by: kidney at January 21, 2011 02:33 PM (ENRGu)

203 The problem with this idea is that this creates a political way to circumvent the idea of the federal gov't directly bailing out states.
Say a state declares bankruptcy and a bunch of pensioners lose a good portion of their pension and the stories start about how they have to chose between food and rent. Do we really believe the federal gov't is not going to step in and give $$ to these people?
so, the federal gov't would not have "bailed out" the states, but it is spending money on the states' problems just the same.

Posted by: monkeytoe at January 21, 2011 02:34 PM (sOx93)

204 The big problem with bankrupt states is that the despicable low-lifes who drove the state into bankruptcy (and the ones collecting all the pension checks) will just pick up and move to a better state (while still collecting their pensions from the shithole state). For those whose fiduciary irresponsibility led to the bankruptcy of the state (which also includes the state and federal courts along with the governing elites who were criminally reckless and worse), the only sort of serious solution would include them being punished, severely. Without this, it doesn't matter what anyone does or how they do it.
Of course, because of all these problems, and the lack of any real solutions to them (olther than just working out the finances, which isn't enough) the only REAL solution is for those states who didn't get themselves into such insane messes. For them, they must detach themselves from the country that is sliding down the abyss, because of the above - otherwise they will be trapped in a country that will just go from bad to worse, as people will eventually realize as they really start to hash out all of the possibilities and consequences that will be forthcoming in dealing with these irresponsible (and often criminal) states, where the political elite colluded with the unions to drain the citizenry of money, services, and liberty. It doesn't get much worse than that.

Posted by: Charles Krauthammer's 3rd, and Last, Brain Cell - The Sane One at January 21, 2011 02:36 PM (AK0dh)

205 monkeytoe, the difference would be this, currently, these government employees are drawing pensions that dwarf what people in the private sector can squirrel away. Furthermore, these were underfunded. These union thugs were also complicit in ... indeed, they probably wrote the laws ... creating the underfunded pension system.

There needs to be a pennies on the dollar reassessment.

Posted by: joeindc44 at January 21, 2011 02:37 PM (QxSug)

206 Yeah, this has to be done. The status quo is that (usually liberal, but not always) politicians or their insulated appointees negotiate sweetheart deals with public unions, then the unions cry "contract", but state courts generally say governments can't ever go bankrupt, so the contracts can't ever be revisited. The only legal path the courts will allow is for taxes to be raised indefinitely, which at some point of course has to tip over the wrong side of the Laffer curve and become counterproductive.

So, contracts or no, screw the unions. They make more than their average neighbors already, and there's a point at which, between breaking a contract or serfdom by taxation, I'll take breaking a contract.

Posted by: Dave R. at January 21, 2011 02:38 PM (NEOUc)

207 The 100% tax on pensions is the idea of the year. These union guys, they're all "It's a contract, you can't break our contract..." Well okay, you're right, we won't break the contract.
And all libs love progressive taxation. So you make the 100% tax only above a certain level, say $75,000/year. That protects all the private pensions (no one gets paid more than that).
Anyway, amish is right, it's all about the politics. Maybe you compromise at 90% tax. That would be great.

Posted by: thesixthmoon at January 21, 2011 02:41 PM (8Rf/A)

208 monkeytoe, the difference would be this, currently,
these government employees are drawing pensions that dwarf what people
in the private sector can squirrel away. Furthermore, these were
underfunded. These union thugs were also complicit in ... indeed, they
probably wrote the laws ... creating the underfunded pension system.



There needs to be a pennies on the dollar reassessment.

Posted by: joeindc44 at January 21, 2011 02:37 PM (QxSug)

What they need to due is just reduce the amount the pensions are paying out. Yes the lawsuits will come. The argument should be that these contracts were not negotiated in good faith as it was never likely, historically, that these levels could be maintained indefinitely and those doing the negotiating had a very large incentive, votes, to agree to a bad deal.

Posted by: Rocks at January 21, 2011 02:41 PM (Q1lie)

209 As previously noted, you can't tax pension payouts. But you can repeal the tax exemption for defined-benefit pensions.

Right now, someone can work for 20 years at $30,000 per year and retire with pension and health benefits worth maybe $2M. In the real world, this means that they made $100,000/year in future pension and health benefits -- that were not taxed -- and $30K of walking-around money -- that was. I'd argue that the entire $130K should show up on the employee's W-2.

The plan for the last few decades has been to so fully burden the future with debt that unsustainable political activities can't be rooted out -- this is a perfect example. Rack up enough "invisible" pension liabilities, and former public employees take over the entire budget. So get 'em out in the open.

Posted by: cthulhu at January 21, 2011 02:42 PM (kaalw)

210 Steps to take before further mangling the Fed/State constitutions:
(a) Asset sales of state property to private entities/citizens (statewide garage sale)
(b) Allow neighboring solvent states to expand by buying border land from the insolvent state(like a farmer selling off his western 250 acres to a neighboring farmer or subdivision developer) What? it'll be at firesale prices and not prime? Too bad, so sad for you.
(c) Require natural resource extraction as mentioned previously. What's that? You were preserving gaia due to your high-minded idealism? Party's over, pal. "Moose! Rocco! Help the Judge find his checkbook." The bill has come due on yourhigh-minded idealism and you can't cover it. Repo mantime.

Posted by: Count Gabbagooo de Monet at January 21, 2011 02:42 PM (XBM1t)

211 And all libs love progressive taxation. So you
make the 100% tax only above a certain level, say $75,000/year. That
protects all the private pensions (no one gets paid more than that).
Anyway, amish is right, it's all about the politics. Maybe you compromise at 90% tax. That would be great.

Posted by: thesixthmoon at January 21, 2011 02:41 PM (8Rf/A)


$75,000 a year? 99% of public pensioners don't earn that either. Unless you are including the cost of the health care too. You know what public pensioners do earn above that amount? Judges.

Posted by: Rocks at January 21, 2011 02:46 PM (Q1lie)

212 A modest proposal: States that go bankrupt lose their Congress seats.

Posted by: Curmudgeon at January 21, 2011 02:48 PM (ujg0T)

213 Capital gains are taxed differently than income. So, pensions can be taxed differently as well. I also think that maybe there's a basis for pre-disbursement taxation of state pension payments, that'd solve the move to Ohio strategy.

But whatever, we need to look at ways that the left, I mean the unions, BIRM, will overcome our desire not to bail them out.

Fed purchases of state bonds. Need to stop that.

What other clever ruses are there?

I know that if the media can get the democrats unblocked power again, the dems will immediately bail out everyone, so we need a constitutional amendment designed to prevent that stuff.

Posted by: joeindc44 at January 21, 2011 02:54 PM (QxSug)

214 modest proposal. states won't go bankrupt. Their union owners won't allow it.
That's a non-starter
Things will get a lot worse before they get better or addressed.

Posted by: joeindc44 at January 21, 2011 02:55 PM (QxSug)

215 You've got to be joking. You don't use the police? Fine, let the go on strike in say LA. How long before LA turns into Thunderdome? You think that would stay contained in just the LA city limits? I don't see too many of them making it across the Mojave on foot. I don't see howsouthern Californiaimploding is Tennessee's problem.
Of course some of us younger ex-military types might see some profit in restaging the opening scene of The Dogs of War and helping hot chicks out of the San Pornando Valley. There's a lot of small airports that can be used.

Posted by: SGT Dan at January 21, 2011 03:02 PM (GgXZc)

216 What if Illinois were to withdraw from the dollar?

Posted by: FireHorse at January 21, 2011 03:12 PM (sWynj)

217 Mega taxation isn't brilliant. It's evil. That's why we shouldn't do it. Ever. Even if we were to do it to people who want to do i to us.

Posted by: cackfinger at January 21, 2011 03:16 PM (HpG1y)

218 It's also worth remembering that State legislatures come and go.

Not Calfornia's. It's been dominated by Democrats for about as long as I can remember. The individual faces may come and go over time, but the political mix doesn't change much.

Posted by: Blacque Jacques Shellacque at January 21, 2011 03:17 PM (nD3Pg)

219 Amishdude's solution is elegant, but what it needs is some viciousness. Like, oh, I dunno, outlawing all public service unions on the grounds that they diminish the power of the Legislature to set budgets, of the Congress in restricting their Constitutional authority to set budgets (for federal unions), and especially they restrict, impede, and reduce the Rights of the People to have their representatives, not a gaggle of knuckle-walking dirtbaggering murderous socialist thuggees (union officials), determine how their tax money will be spent.

Unions are at base undemocratic, anti-Constitutional, and anti-Liberty. So put the 100% tax on them and then arrest the fuckers if they try to strike.
Also throw a requirement to have all the current state contributions be equal to .1% of the union's contribution from this point forward. So the state drops 100 bucks and the union is billed $10,000.
Start garnishing their fucking golf courses and mafia hideoutsuntil they freak out and end up in prison.

Posted by: Inspector Asshole at January 21, 2011 03:23 PM (thGxc)

220 What if Illinois were to withdraw from the dollar?

Then its residents would be paid in Daleys.

Posted by: Blacque Jacques Shellacque at January 21, 2011 03:27 PM (nD3Pg)

221 Give away the state's pension plans.
Here in California, the biggest pension fund is CalPers, biggest in the world I hear. There are several others. The state's politicians have been abusing them for decades.
Under EXISTING federal law, one can take the existing assets of a pension fund, terminate the plan, and give the fund to private companies like Met Life to manage based on long-term competitive bids. They would continue to pay out pension checks, but only based on actual fund performance minus administrative costs. Essentially, it is buying an annuity for the pensioners.
Gets the state largely out of the pension business. Current and future state employees get cash payments into a pension fund of their choice on a pay-as-you-go basis. No more hide-the-salami from the voters.
Even better - give CalPers to Goldman-Sachs. Let one Democratic consituancy screw another Democratic constituancy.

Posted by: Whitehall at January 21, 2011 03:58 PM (FmPSC)

222 Cicero has it exactly right back in #82. This isstate debt, governed bystate lawscreated in accordance with the state's constitution. If a state wants this option, then pass an amendment and take care of it. The Federal government has no morerolein thisthan the governor of Maryland hasin the state budget of Iowa.
I'mnobody's Eugene Volokh, but I'm not comfortable with how the article simplyhandwaves the Constitutional aspects.States are emphatically notjust really big municipalities. Municipalities are ephemeral and arbitrary - they come and they go.States are not mere subdivisionsof the Federal government, and the Federal government does not have any authority to createViceroysin the form ofbankruptcy judges.
Whether the state"wants it" or not isirrelevant.Astate cannot surrender its own soverignty.The passing whims ofelected representatives do not rise to that level of power.
"In other words, part of southern states' sovereignty was withdrawn because they did bad things with it."
Dude. The "bad thing" that made that curtailment of soverignty possible was secession from the Union and waging bloody civil war. California is royally boned, but there's really no comparison here.
Also, as a purely practical matter,thatlimited soverignty is grosslyabused to this very day byjudges and special interests who depend on those restrictions for their very existence. The people of those states, generations later, are assumed to be incompetent, racist monsters.
When a state goes into bankruptcy the Federal government will never ever surrender thatspecial overarching power over the budget. And it's only a matter of time untilthe rapacious bastards figured out a way to usher well-governed statesinto receivershipthrough the backdoor, for purely political reasons.Look at all those juicy assets sitting just out of reach, being mis-spent onbackward local initiatives! Federal bankruptcy could be abused in terrible and unfixable ways.
Ace, please reconsider your position on this. I think there are deeper problems here that could turn this fix into a crowbar for destroying what's left of local governance.

Posted by: Galos Gann at January 21, 2011 04:03 PM (T3KlW)

223 I am dismayed at the presumption that the state public employee unions are some sort of unstoppable political power. They do have a track record of past success, granted, but remember words from the Good Book:
"Pride goeth before destruction, and a haughty spirit before a fall."
Public employee unions have displayed both pride and a haughty spirit. I'll take a guess as to what comes next - a voter revolt to bust the unions. We may have to slip a bit further into the darkness but the worm will turn.
As to the Voting Rights Act and the states, the US Constitution also guarantees each state a republican form of government. I'm not sure if that was the basis for the constitutionality of the VRA, but is an enumerated power of the federal government over the states.

Posted by: Whitehall at January 21, 2011 04:32 PM (FmPSC)

224 whitehall, I like that concept, if it can be done, give whatever funds there are to a real firm that can give real investment results, who cares if the resulting number is 20% of what they were promised.

Posted by: joeindc44 at January 21, 2011 04:41 PM (QxSug)

225 Whitehall, what you describe is essentially what would happen in a bankruptcy anyway.

Posted by: kathleen at January 21, 2011 04:46 PM (NKTR5)

226 The ability to just go bankrupt will encourage states to be more fiscally irresponsible.

Posted by: **** at January 21, 2011 05:21 PM (TC/9F)

227 "Let's not notice the states in danger of bankruptcy are those controlled absolutely by liberals."

That links to something about Michael Vick. Where's the relevant link?

Posted by: SISO at January 21, 2011 05:38 PM (GzO1t)

228 Dude. The "bad thing" that made that curtailment
of soverignty possible was secession from the Union and waging bloody
civil war.

Posted by: Galos Gann at January 21, 2011 04:03 PM (T3KlW)
Honestly now. Who waged bloody civil war on whom?

Posted by: FUBAR at January 21, 2011 05:48 PM (McG46)

229 Kathleen,
This is but ONE of the things that can happen in a bankruptcy. Alone, this won't solve all the state's problems but it is one major step. It protects our credit rating but spending cuts have to happen too.
The winning argument here is that "bankruptcy" as understood is not realistic since states are sovereign. Yet a state could get itself out of its pensions this way. It would have to repudiate the union contracts but they seem not "arms lengths".
We must be spending over $1 billion on the absurd AB32 global warming regulations - the California Energy Commission's budget got a 50% boost in Brown's budget to over $600 million a year. They do nothing but get in the way and produce ZERO energy.

Posted by: Whitehall at January 21, 2011 05:57 PM (FmPSC)

230 @228 "Civil War" implies two factions wanted control of the same land. The South wanted out, and the North said, _Fuck You._

Posted by: SISO at January 21, 2011 05:58 PM (GzO1t)

231 "147 132 There really is only one way out sans bankruptcy, but we all know it won't happen.

Actually, I think at a Federal level, massive inflation could also fix much of this (or at least help signficantly) by eroding the values of fixed benefit retirement plans down to a nub. "

Since the 70's government pension plans are typically adjusted by some sort of inflator, so inflation doesn't actually reduce their cost.

Posted by: **** at January 21, 2011 06:00 PM (TC/9F)

232 civil war, this time the union thugs want your money. see how they come in busses to protest at CEO houses

Posted by: joeindc44 at January 21, 2011 06:30 PM (QxSug)

233 Whitehall, it's not "but ONE" of the things that can happen in bankruptcy -- an underfunded pension plan gets terminated in bankruptcy, indeed it's the raison d'etre for filing bankruptcy much of the time. (that the company sponsors want to terminate the plans). likewise, the states want to terminate, that's why they are entertaining the notion of filing bankruptcy. But they can't say that to their constituents. By filing bankruptcy they get to blame the political pain on the bankruptcy court.

Posted by: kathleen at January 21, 2011 08:47 PM (NKTR5)

234 1.What's WMV
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Posted by: jerry at January 21, 2011 10:45 PM (sqgXT)

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Posted by: Zencart at January 24, 2011 04:25 AM (thSDi)

236 You really get what you pay for with the Rosetta stone languagecourses . If you’re looking for other benefits, consider that fact that you don’t have to commute to college in order to learn a foreign language. Rosetta stone’s lack of compatibility with PDA’s is not a very serious drawback, especially if you don’t want to drive or walk to school anyway. If you intend to study a language entirely at home, then Rosetta stone is the best alternative to sitting in a class room. Another benefit of utilizing this powerful language learning tool is in preparation for a college course. You can use the software to learn the language and then fly through your college course, get a letter A grade, and apply the credits toward a degree or certificate. I think you will have interests to see rosetta stone discount

Posted by: Rosetta stone at April 18, 2011 08:34 PM (25sIw)






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