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The Nation's Pulse
Insolvency, U.S.A.
There are fiscal cliffs at every level of government, and it doesn’t help that states and many municipalities cannot legally go bankrupt.
(Page 2 of 2)
In a 2011 op-ed for the LA Times, Newt Gingrich and Jeb Bush defended the idea of municipal bankruptcy and argued for a new chapter in the federal code to allow states to go bankrupt:
When California refused to bail out Orange County, the county entered bankruptcy and emerged within 18 months. Within three years, the county returned to an investment grade rating, and it repaid 100% of the principal of the vast majority of its investors by 2000 without raising taxes … The lesson is that voluntary bankruptcy offers taxpayers the option to restructure state finances responsibly to achieve long-term fiscal health…
Giving states the federal solution of bankruptcy could push those that up till now have put off their fiscal nightmares to face facts. Chapter 9 municipal bankruptcy has the same potential on the local level—if only states that bar the process would give mayors and city managers the option.
Photos: UPI
About the Author
Jackson Adams is an editorial intern at The American Spectator, a former teacher, ski instructor, and political campaigner, and a graduate of Theology from the University of Oxford.
Letter to the Editor View all comments (21) | Leave a comment
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Robbins Mitchell| 2.21.13 @ 6:19AM
Well,these blue state public employee unions who have always voted straight Yellow Dog are being done in by their own greed and corruption....cry me a river
Von Mises Jr| 2.21.13 @ 8:52AM
The problem seems to be even much graver. Allegedly, in New Jersey, Public Employee Pension Plans for State workers that include the teachers and cops that retire on the State Pension Plan have protection even superior to Bond Holders. So when the State hits the wall, even though massive jobs will be lost and services discontinued, it appears the retired public employees still get their $50K+ pension annuities while even Bond Holders may face the same fate as Chrysler with perhaps thirty cents on the dollar.
Christie has helped the situation but only delayed the inevitable. When he took Office, the Pension Plan had some $47B in Contributions that should have had $107B or $0.44 on the dollar. The $65B in Cadillac Health Plans had zero invested, so the net obligation was funded at about $0.27 on the dollar.
To his credit, Christie raised the cost of health care on public sector unions from 3% to 30%, or from about $60 per month to $600, but this only delays the unavoidable. And when retired teachers and cops are driving BMW's and eating steak while others out of work and broke, it does not bode well.
Maxwell| 2.21.13 @ 9:45AM
Von, as long as we are on the subject of Chris Christie I (as always) have a few questions. First is, I still don't know why Christie did not say to the state workers & their union, you want to belong to the union, it is up to you. I (the state) will no longer collect dues. The average state worker would probably see an extra 35 to 60 a pay increase.
Second, I would have loved Christie to have raised the gas tax and fully fund the Transportation Trust Fund. No games to be played with the trust fund, I know that would be a challenge. I think that would have showed real fiscal management. Speaking of the Transportation Trust Fund, there was just ONE Dept. of Transportation Commissioner in the past 30 years who knew what he was doing, Jack Lettiere. He got tossed out because he was NOT political.
Von Mises Jr| 2.21.13 @ 11:15AM
To Christie's credit, he did raise another $500+ per month from public employees to help fund the Cadillac Health Plans. He also raised the Pension contribution, I believe. So he dealt with a time bomb by keeping it from going off within about 5 years to something longer.
But New Jersey is a socialist cesspool and the people of New Jersey need him to stand strong on other issues. The two-thirds majority in the Senate and Assembly keep sending him a Foreclosure Bill that would be New Jersey's Sub-prime on steroids and so far he has vetoed it. He did veto the ObamaCare Exchanges for now. He had an Agenda21 Executive Order that waned after Sandy. Perhaps there was at least one good thing that happened during the disaster. But the DOT, HUD and other bureaucratic entities seem more interested in implementing Agenda21 as the central planning fix for everything.
So New Jersey may be too convoluted and too far down the road to save. The accumulation of corruption and greed over many decades has this State with insufferably high taxes, over-priced housing and constant infringements on liberty and property.
Now the Assembly (today I believe) wills surly pass gun control. It then goes to a Senate that is 5-3 Democrat and most likely will move to his desk. I suspect that if Christie signs gun control into law, his only chance at re-election is as a Democrat. And that is not very likely with so many hardcore socialist in the State.
Maxwell| 2.21.13 @ 11:21AM
Von, your last paragraph was of the most interest. If there is more gun control signed into law by Christie (like there already is not enough) then I think Christie will cook his own goose as far as his national ambition goes. We will see.
Von Mises Jr| 2.21.13 @ 1:11PM
He will not even be re-elected in Jersey if he signs gun restrictions, Maxwell. About 500 people showed up about a week ago to protest the Assembly passing some 24 gun Bills. The other day, a MoveOn protest was outnumbered by about 3-1 by our new 2nd Amendment group and others. There are dozens of TEA party groups I am familiar with in Jersey and the numbers I have heard in terms of groups and email lists is surprisingly high for the Northeast.
Our State has some very rural areas and we are close to PA and Upstate NY where many sportsmen hunt and fish. Christie is not as popular with the people in the State as he is with the nation since we have two-thirds liberals that tend not to support him and we have some pissed off conservatives over this gun control Legislation.
Maxwell| 2.21.13 @ 1:20PM
You referring to nj2am, i think that is the group that I have to join this week. The protest was all all over AR15.com, hometown section. As I say, don't blame me, I voted for Lonegan.
Von Mises Jr| 2.21.13 @ 2:36PM
Here is the email to get on the list for NJ Second Amendment Group: admin@nj2as.com
Maxwell| 2.21.13 @ 2:48PM
Thanks!
Jacob McCandles| 2.21.13 @ 9:56AM
Yesterday the Fed minutes basically said: "Well, there's a chance that we won't be printing money like this forever...."
and the stock market falls, gold plunges. Is this the most absurd situation ever?!
Jacob McCandles| 2.21.13 @ 9:57AM
Anyone who has any common sense knows where this is headed, correct?
Kwan| 2.21.13 @ 10:38AM
I suspect it'll be a modern day version of the Weimar Republic. Which means investing in companies that manufacture wheelbarrows could be profitable.
Jacob McCandles| 2.21.13 @ 11:00AM
Good suggestion Kwan. Peter Schiff is one of few economists who seem to get this. All this capital created out of thin air....
TLP| 2.21.13 @ 11:51AM
Absolutely.
I think the Author might wanna check I with the Chysler Bondholders about the Bankruptcy Laws. And, find out how the Halfrican's Pal's got paid, before the creditors, in the Solyndra Mafia Front Company deal.
We can't right the ship. The Democrats are determined to Lay Her Low with a Death by a Thousand Holes. Drilling another Hole in the Floor, every Minute of every Day. Every Day of every Week, Every Week of every Month. Every Month of every Year.
President God is not gonna take one step backwards. Not one. He will Print, Borrow, Steal, and Spend, until somebody stops him.
As Sean Connorey says to Kevin Costner, in the Movie: The Untouchables - "What are you prepared to do?"
Republicans have to answer one simple question: Is this Country more important than your Cushy Job?
Think about it: If you go to Washington to Do the Right Thing? Then, why do you NEED a Political Consultant? Why do you CARE what the other side is calling you? Why do you WORRY what the Liberal Media might say about you?
I've written this a Thousand times: "What does it profit a man, to Gain the whole world, and Lose his Immortal Soul?"
I don't Lie. I don't Cheat. I don't Steal. And, I've Never Cared what others thought about me. Which might explain my working for Other People only 3 Years, my entire life.
It's the easiest thing I've ever done, and something that is all but Impossible to find in the Sodom and Gomorrah on the Potomac.
We're Flucked.
Get used to it.
markenoff| 2.21.13 @ 1:22PM
You wanna know how to get Obama? They pull a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue. *That's* the *Chicago* way! And that's how you get Obama. Now do you want to do that? Are you ready to do that? I'm offering you a deal. Do you want this deal?
markenoff| 2.21.13 @ 1:25PM
Welcome to Chicago.This town stinks like a whorehouse at low tide.
TLP| 2.21.13 @ 2:55PM
And, don't go lookin for that Whore, with a heart a gold, either.
Cat Shot| 2.21.13 @ 12:54PM
I used to think nothing of lying, cheating and stealing. Until the Good Lord beat the living hell out of me. He's coming, and He's pissed off.
TLP| 2.21.13 @ 2:56PM
You n me, both.
cicero| 2.21.13 @ 2:56PM
Municipal bankruptcy works only if the restructuring solves the problem. Stocton, Ca., emerged from its Chapter 9 with police and fire salaries and pensions just as idiotic as they went into it with. When the "public servants" are earning twice as much as those whom they profess to serve, and can retire with pensions in half the time as those they profess to serve, you have the tail wagging the dog.
The citizens of this country have sold themselves into bondage. They traded the promise of "safety" for freedom, and now they shall have neither.
homme nike air max BW | 2.22.13 @ 2:41AM
The situation has become so dire, that the state has postponed a $500 million bond offer in hopes that some kind of solution will ameliorate the consequences of the latest S&P downgrade to