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.
“They are readying a massive assault on us,” said Charles M. Loveless, legislative director of the American Federation of State, County and Municipal Employees. “We’re taking this very seriously.”
Mr. Loveless said he was meeting with potential allies on Capitol Hill, making the point that certain states might indeed have financial problems, but public employees and their benefits were not the cause. The Center on Budget and Policy Priorities released a reporton Thursday warning against a tendency to confuse the states’ immediate budget gaps with their long-term structural deficits.
“States have adequate tools and means to meet their obligations,” the report stated.Yes they do - it's called "taxing the people who have all the money." We have historically low tax rates on the wealthy and historically high income inequity. Yet we are seriously considering a Revelations-style destruction of the American economy rather than getting these people to finally start paying their fair share.
By the way - this is massively dumb:
“The precipitating event at G.M. was they were out of cash and had no ability to raise the capital they needed,” said Harry J. Wilson, the lone Republican on President Obama’s special auto task force, which led G.M. and Chrysler through an unusual restructuring in bankruptcy, financed by the federal government.What a stupid analogy. The scenario would have to be this: GM has billions of receivables ready to be collected, but decides not to because asking their customers to pay up would be "bad for business." So they declare bankruptcy and screw their employees over for their pensions.
No court in the world would allow that (well, maybe the current corrupt Supreme Court). They would demand GM collect the revenues it is owed before reneging on their own debts.
Well, the wealthy have been receiving all the services of government for years, and they haven't been paying. Before we stick it to the public workers who believed the promises made to them in good faith, the states - and the cities and the feds - should demand that the people who've had a free ride up until now pay up.
The other day was the 50th anniversary of Eisenhower's "military-industrial complex" speech. You know what the top marginal income tax rate was back in Ike's day? 91% (on income over $3.2 million in today's dollars for couple).
So don't whine to me that "we don't have the money!" WE don't have the money, but THEY do. Tax THEM before you break promises to US.