Obama Regime Studying Ways For States to Declare Bankruptcy…
This should end well.
(NYT)- 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.
Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.
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.
“All of a sudden, there’s a whole new risk factor,” said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commission’s Office of Municipal Securities during the Clinton administration.
Posted by ZIP on Thursday, January 20, 2011, at 10:31 pm | 
Tweet
California with the new Moon Beam Brown governor will lead the parade to the treasury.
.
My state (MA) won’t be far behind.
I do not give a flying fig…it is time for them to end up paying the piper- we all have to in our own households because of what congress-critters have done to us for decades now…enough already.
Congress had better say NO!
…or those that vote for bail-outs will have a very dim future.
Thank G_d that the Republicans have control of the purse strings. Now if they will only hold their ground.
all part of the plan. state declares bankruptcy, oboma bails their sorry butts out, now the state must do what the savior says
I consider myself a state. I just spent the last of my money, helping feed the homeless. I will now be homeless soon myself.
Can I get bailed out also?
this will surely end……….badly.
This sounds very dangerous and unconstitutional. The regime is attempting to bypass and obfuscate Congress by using unconstitutional “czars” and executive fiat. Now it seemingly wants to tighten its stranglehold on the states by pushing them toward financial dependency on the federal government, thus blurring the boundary between federal and states’ rights.
What Redwine said. Exactly.
The dismantling of the republic continues at astonishing speed.
This will be an opportunity to pay the Public sector union goons .01 on their pension dollar and prohibit further public employee unions. Many will not like that option. Watch out!
What are the repercussions if a state is bailed out? What sort of leverage does this give the Feds? Can they create new state-specific taxes?
I don’t believe any of the current administration would save their own Mother if there wasn’t something in it for them. They’ve thought this out, lie by lie, to gain power and money. But how?
If they go bankrupt, does that mean they don’t have to pay any of the public pensions?
Couldn’t the Feds rescue the states with a bailout in exchange for taking over state assets which they would “regulate” under federal control? Then they could institute Agenda 21 easily and be well on the way to the NWO.
Of course, none of this can be done without completely violating the United States Constitution as well as the State’s Constitution.
Once a state declares itself insolvent, it is open to the highest bidder to come in and take control of the state. In essence, if Moonbeam declares the state insolvent, he WILL go begging to the Fed for money at which time he will surrender control of the state and the state will no longer have any power as decreed by the Constitution.
One by one, the states who’ve been run into the ground embracing all this “Social Justice” horseshit will fall victim to the federal government and state sovereignty will cease to exist.
Welcome to the New World Order – brought to you by 50+ years of liberal excess and insanity.
it is open to the highest bidder to come in and take control of the state
China?
States cannot go “bankrupt” as we know it. Neither politicians nor courts can break contracts without our whole system of law and government collapsing. The states have to limit entitlements (which are not contracts) and reduce discretionary spending.
Be careful who you decide to demonize as “responsible” for the state debt. Especially when it’s the media and politicians pointing the finger.
Funny how the politicians’ pensions and benefits are never discussed as a “solution” to reducing the state debt. The political class are entitled to full benefits just from being elected and can collect several pensions. Not so for the non-political class peons who are only allowed to collect one pension no matter how many jobs they worked.
For instance, Governor Chris Christie of New Jersey is due to personally collect three pensions (Morris County Freeholder, Attorney General, Governor). Yet he belligerently refuses to pay the state’s pension obligation which the state has failed to do for 13 years, despite a court order to do so. Christie says no, he won’t do it and brags he (the $tate) has plenty of lawyers.
The NJ pension system was the richest and healthiest in the nation 13 years ago until the politicians found a way to evade the law. By not paying the state portion into the pension system and allowing the municipalities to pay only 10% of their obligation, the politicians effectively bled the pension by attrition. Not only that, but they took what money was still left in the pension and put it in high risk investments instead of bonds during the mad 90′s when Christie worked as a securities lawyer. But the politicians and the media want all public employees to be seen as the greedy bad guys who bankrupted the system and the state.
Why are the politicians never held responsible for playing Monopoly with our money?
Why not? Since China owns massive amount of our debt and a lot of that debt is directly related to the stupid California legislature and their practice of funding illegal aliens, criminals etc; I don’t see why China couldn’t buy into Kalifornication and take control of the state. Now that would be interesting when China starts setting up off-shore drilling rigs to get “their” oil off the Kalifornia coast. The liberals will wail and scream but there will not be a fucking thing they can do about it. I suspect China won’t be as soft on criminals and protesters as the current regime is.
You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price search online for “Wise Health Insurance” If you have health insurance and do not care about cost just be happy about it and trust me you are not going to loose anything!
Sentinel says:
“One by one, the states who’ve been run into the ground embracing all this “Social Justice” horseshit will fall victim to the federal government and state sovereignty will cease to exist”
May God Bless the new Republic of Texas.
Lemme guess, all liberals’ fault right?
No Ru… not everything…
A different NJ Gov… named Christie … Todd Whitman
Begged the police and fire pension for a “loan”…In the mid 90′s
The loan was given to the State… To help balance the budget and a promise of full repayment …
the State has since failed to repay the loan… leaving the once very solvent
Police and fire pension broke and in serious trouble
What a way for the politicians… Of all flavors… to shaft everyone
By declaring bankruptcy ….
Christie Todd Whitman for those who may not know her… is a Republican
You can google the story….
It’s quite a read….
Ironically the unions that fund his campaign will now go down.. Why does any group trust this man? the user of Taqiyya to take advantage?
commercials are pushing municipal bonds as a good investment.. they will soon be like the GM stock I bought to support an American icon… worthless..
Redwine: It doesn’t just blur the line, it eliminates it. Sovereign countries don’t “declare bankruptcy”, and then simply “reorganize”, they default on their loans. This is considered a “bad thing,” not just a case of being “naughty.”
If States are allowed to just declare “bankruptcy” in order to duck out on their obligations, then they are being held to a lower standard and as such are no longer sovereign. That is apparently fine with many of those running the states as it gives them political cover at no cost to themselves. It also plays into the hands of those to whom the sovereignty of the individual States is anathama, and drives a stake thru the heart of the resurgent “States Rights” movements, allowing the Progressives in the federal government to tighten the noose even tighter.
What Random in Texas says, PLUS. LOTS of retirees “invested” in State Government backed bonds, cause they usually payed say 6% interest as opposed to maybe 3- 4% Fed Bonds or T-Bills. Many of the “greatest generation and the Korean War generation” don’t get much on SS, and depend on bond interest to literally pay for housing, food and clothing and utilities.
If States are allowed to go down and throw out the bondholders (See, e.g., Chrysler) then our more elderly fellow Americans are gonna get screwed too.
Hell if you throw them in with all the public service retirees, that will more than surpass the numbers of those who can’t afford health insurance.
@jetstream and Rob.,Wah,Wah,Wah.STFU.I live in N.J. and I think it would be great to see these pensions dry up.I work in the private sector and I fund my own healthcare and retirement 100%.The taxpaying citizens never made these agreements with the unions.It was the elected officials (mostly pro union Democrats)who made these contracts.I am sick and tired of my money going to fund your ENTITLMENTS and I don’t think I am alone there.So quit your whining and help to be part of the solution,not the problem.PENSION REFORM NOW.
@mike r.
Need I remind you that the elected officials were elected by folks like you? Where were you and those like you when this was going on? As long as you could kick back, watch TV and pop a brewski, you were fine. But now that the fecal matter has impacted the rotating blades your solution is “cut them off at the knees and watch them bleed?” You are fine, so screw everyone else?
This will not happen in a vacuum. Just because you funded yourself 100% don’t think you will be unaffected. Sick of the deals? Sick of the entitlements? Well, elect officials that will change things, not just keep on spending. Get involved, don’t just sit on your couch and pontificate. Cut government services and employees. Then you won’t have as many government workers receiving pensions down the road.
However to just yank the rug out from under hard working folks who are playing by the rules is not just wrong, it’s immoral. How would you like it if the government came up to you and said “you know, I realize that you have been a good citizen and have paid your way all this time and are set for your retirement. But you know, that’s a pretty large nest egg you have put away, and we really don’t think you “need” all that for your retirement. We think we need it more, so we will just take it away from you and let you fend for yourself. But don’t worry! You can continue to work or – there is always social security!”
Don’t think you would like that much. So what makes it OK for you to say the same to public employees? And what makes you think they will just sit around and take it any more than you would?
Yes, things are bad. Fixing things is going to hurt. It is going to hurt a lot of folks, and you are not going to be exempted. Think that sucks? You are right – it does. Too bad, that’s life. Get over it. Start being part of the solution and not part of the problem. And make no mistake about it; if you are sitting there feeling smug and superior, deciding who of your fellow citizens to throw to the wolves while wiping the cake crumbs and cavier off your face, you ARE part of the problem.
MI
@Random in Texas., Right off the bat with your first sentence you are wrong.In case you missed it I live in N.J.,a blue state.I am a registered Republican and always vote that way.But unfortunately my votes don’t matter because UNION LOVING Democrats win most elections in this state.If you saw my last comment you would have seen that I am for PENSION REFORM.The biggest problem I have is as much as I want to be part of the solution the unions don’t.Don’t tell me that’s life get over it and be part of the solution because I’m trying and hopefully with our new Governor we can make strides towards that direction.Until public employees(and based on your comments that probably includes you) are willing to make concessions I am going to stick with my comment that it would be great to see these pensions dry up.
mike r. says:
January 21, 2011 at 9:59 am
“@Random in Texas., Right off the bat with your first sentence you are wrong.In case you missed it I live in N.J.,a blue state.I am a registered Republican and always vote that way.But unfortunately my votes don’t matter because UNION LOVING Democrats win most elections in this state.”
Yeah. That sucks. So much for representation.
hear ya — after 8 years of “Fast Eddie” (voted in by Filthadelphia )
hoping things will improve with a conservative (Tom Corbett)
–Neighbor in PA
@mike r:
Cool then! Not your responsibility – go ahead and make them leaches pay!
I know how that goes; I am in a democrat district here in Texas as well (yes, there still are some). This particular one has been “in the family” for going on 60 years or so now.
So what would be your suggestion for people working for state or local government? You do realize that SOMEONE has to do so. Should they just do it out of the goodness of their hearts and either work until they die, or just “retire” off to a homeless shelter somewhere? I am not saying that their pensions aren’t lavish. Having been set up by Unions over the years, they no-doubt are. But I don’t think the solution is to just cut them off cold turkey and throw them out into the streets.
Yes, I did see your comment about pension reform. Well taken. But from reading what else you wrote, it seems like your idea of pension reform is to simply eliminate all pensions. Fine, as far as it goes, at least for new employees. What are you going to replace it with? A 401k type setup is fine by me. I am sure there are other solutions. But you also need to do something with the people already drawing pensions, and the ones already in the system to draw them in the future.
As correctly stated elsewhere, there isn’t enough money in the system to finance all this. So some compromises need to be made; probably some combination of cuts in hiring, cuts in benefits, and reform of the system; perhaps some sort of phased approach on changing the pension system. Again, not pleasant, but necessary.
Yes, expect the unions to fight this kicking and screaming. I do feel for you, living in New Jersey.
Keep fightin the good fight and don’t give up. However I think you will find it a bit difficult to win folks over to your side if you are telling them that you hope their pensions dry up and blow away.
@mike r: Missed part of what you wrote the first time around.
Yes, you guessed correctly. I am a government leech. At the federal level no less. I am a civil service employee working for the United States Air Force. You know, the folks that are charged with maintaining our national security.
I am also a retired reservist, with 30 years service time (17 of which were on active duty), so I guess that makes me a double leech.
Are my pensions (yes, that is plural) too high? Probably. Am I a union member? No. I am in a part of the federal civil service that is not and by law, cannot be unionized. Which is fine by me, as I have little or no use for unions. Do I see my pensions as “entitlements?” Yes, I guess I do. I earned them. I didn’t write the rules. Do you see your retirement plan as an “entitlement?” Put another way, would it piss you off if someone tried to confiscate it?
I also did not and do not support all the government spending that is going on. I am particularly upset that apparently my elected leadership can spend whatever they desire without bound and then come to me and say “here’s the bill – pay for it.” Incidently, I vote Republican (or Libertarian if no Republican on the ballet) in every election. I am just as upset as you are with all the spending and lavish pensions since I also have to pay the bills.
And in case you were wondering, pension reform has already happened at the federal level at least once. I am a FERS employee; my pension is MUCH less lavish than my fellow CSRS employees enjoy. Most of my retirement on the civil service side will be provided by my TSP, the civil service equivalent of a 401k plan. On the military side, as a reservist, I don’t begin drawing a pension until I am 60. And reserve pensions are typically much less that active duty pensions are.
So while I may be a leech, at least I am not a terribly bloated one.
Can the federal civil service retirement system be further reformed? Undoubtedly. Do I think the government is too big and doing too many things that it should not be doing? Yes. Do I think it should be cut? Yes. Do I want to lose my job? Of course not. Who does? I think it only fair to point out that at least my branch of the federal government (DoD) is doing a constitutionally mandated job – defending the nation. And if it should happen that my job is cut (Democrats seem to think that budget cuts start with the DoD, and end with the DoD.), well, I will survive. Others have survived being out of work. It happened to me for five months when I originally separated from active duty.
So what sort of concessions do you have in mind for me? Other than taking away my pension? Can I at least keep my 401k, or would you like the federal matching money back as well? Would you like my military pension too? May as well; I won’t draw it for another 6 years anyway, and the way things are going who knows if I will draw it then?
When I started working, I never expected that I would ever see a social security check despite paying into it; I figured it would be bankrupt by then. I still feel that way today; social security has never been a part of my retirement planning. I never thought I would feel that way about my military retirement though. So tell me; when I am standing on a street corner with my “Homeless vet will work for food” sign in hand, will you give me a handout? Or will you just drive on and ignore me…
It’s all about control Obama is not for the people he is a lire and a fat mouth!!!! This is only a start of gov control!!!!!!
@Random in Texas., I appreciate your thoughtful response .First and formost I don’t want to see anyones pension dry up and blow away as long as they can agree that concessions need to be made.These people who don’t understand that concessions are needed,do they realize what happens if a state were to go bankrupt ?Pension reform must be done to save their money.It just sickens me to have to pay for benefits for public servants that are much better than those in the private sector.Just this week the Mayor of Camden to help avoid laying off dozens of police and firemen asked the union for concessions and the union members overwhelmingly voted against them.Unless this mentality of our union public servants changes than pensions are going to dry up and blow away.
@mike r.
A state going bankrupt (or more exactly, going into default), would be a disaster. On the other hand, federal bailouts for states would be an even bigger disaster with far-reaching consequences. This whole thing has gotten out of hand and there is going to be more than enough pain to go around. Problem is, there seem to be a lot of folks out there that think that somehow they are going to be exempt. And you are correct – many of those are in the public sector.
I don’t understand the union mentality. Are they blind or are they just stupid? You are quite correct; unless they do something and do something fast (and that something HAS to include substantial, meaningful concessions of some kind), their pensions AREgoing to dry up and blow away. (I submit that this has quite a different flavor and impact than saying you think it would be great if their pensions dry up and blow away!)
I understand what you mean a little better now – it’s just the way you put it, I guess. One problem with this type of conversation; it is easy to take things the wrong way. No visual referents, no verbal referents, etc. I suspect that we probably shouldn’t even be arguing as we are probably pretty much in agreement with what is the problem, and at least in spirit on the solutions.
Unions remind me of little birds in a nest with their beaks open saying “feed me! Feed me!” with no regard of how the food gets there or who sacrifices to collect it. They just want more of it shoved into their gullet and heaven help anyone who disrupts the flow of goodies!
mike r. said “Just this week the Mayor of Camden to help avoid laying off dozens of police and firemen asked the union for concessions and the union members overwhelmingly voted against them. Unless this mentality of our union public servants changes than pensions are going to dry up and blow away.”
The police and fire unions offered a 20% pay cut and furlough days every month, but the city rejected it out of hand – not even in the ballpark they claimed.
So exactly who’s “mentality” is in question.
Again, why is no one talking about the politicians’ lavish pensions and benefits? What about the politically-appointed, no-show, non-civil service public employees? And where are the big investigations to weed out people fraudulently collecting entitlements or benefits?
The politicians are the ones responsible. From BOTH parties. They’ve been playing us with the partisan blame game to distract us from their theft and fraud. They stick together to play the system and get to go on their merry way fat and happy, while the rest of us bicker amongst ourselves over who should pay. Suckers.
@jetstream.,I’m in total agreement with you as to politicians lavish pensions and benefits but like I said I live in N.J. and elected officials(union friendly)whom I didn’t vote for are not going to change that.You ask who’s mentality is in to question, obviously the concessions the union made wasn’t enough to save those jobs.It’s going to take alot more than that to save the day.So I would say that the union’s mentality better change or they might lose their jobs or worse yet their pensions.