McConnell favors letting states file bankruptcy over a bailout. States are currently forbidden. So, what are the plusses and minusses to having states go under?
States declaring bankruptcy
- Thread starter Marvin the Martian
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He wants them to default on their pension liabilities. You know, the ones for teachers and police and firefighters. Takers, in other words.
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Pension system is broken. It’s literally destroying many cities. A cop can work 20 years and draw a pension for 50 years. Or get sixty years of disability via the pension board for a blown out knee. I’m all for the cops. More than most. But the system needs a massive overhaul in many places.
I won't argue that point. But Mitch is advocating for gutting them altogether.
Changes are probably important. But what do we do with someonevwhp has worked 35 years and retires in May? Obviously if they completely lose everything, they are totally screwed. How do we change a system to be fair to everyone? My guess is state bankruptcy just leaves a whole lot of people living on social security alone.
Can I buy a distressed state for a couple thousand bucks?
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yeah there has to be protection for those circumstances. As for changing the system I don’t know. Grandfather existing employees and change it for new hires moving forward. I know it’s all a mess. Those pensions are a benefit of the gig that was usually an inducement to even go into that line of work. Hard stuff.
I already own that . . .
All the feds can do is allow states to file bankruptcy, probably similar to Chapter 9 which is now available to local governments. Whether bankruptcy actually happens is not within federal authority. A chapter 9 bankruptcy is not "going under" as in a bankruptcy liquidation. Instead it's a forced reorganization or restructuring of debt. That allows, for example, the affected local government to renegotiate onerous contract obligations. You might recall Detroit filed Chapter 9 10 or 15 years ago which allowed it the manage its debt better and return to a sound fiscal base.
Whether a local government can file Chapter 9 is still in control of the states. Local government bankruptcy could be restricted by state constitutions or statutes. State government bankruptcy will also probably require specific legislative action.
Colorado takes a strong view towards the plenary power of all levels of government to make annual budgets. There is judicial precedent in Colorado allowing governments to modify some employee benefit plans through the budget process, since budget setting takes priority. But those cases don't involve pension plans which might be seen differently. Even with strong budget authority, states can't print money.
This pandemic will strain to the breaking point the financial structure of many levels of government. Not only because of the expense of coping, but also because of tax revenue, particularly sales tax, being slashed. I don't think the feds can print enough money to take care of what this pandemic is costing the federal government and to cover state and local problems too. State and local bankruptcy reorganizations seems to be a solution. Reorganizations are a way to spread losses. McConnell has a pretty good idea.
I am so sorry it’s not for sale, it can however be bought, if you know what I mean. Minimum starting bid is 2 billion equivalent usd in each of the world’s currencies and a fully furnished and stocked private island with accompanying yacht and sail boat oh and don’t forget the armory, details only discussed over secure transmission or face to face, damn forgot the gold dummy don’t forget the gold!!
You must be confused . . . that's a joint tenancy title at best . . . .
Wait I own that particular state, please don’t drag the esquires into this my blood pressure escalates to unhealthy levels and I think I should avoid such behavior
Oh well that clears it up then I withdraw my claim of sole ownership seems selfish not share. I was raised right proper doncha know!
So you're saying my deed is a phony?!??!!?
Has to be. I bought it early one morning at a bar in Paducah, recommended by The Capper.
I would like to also report my blood pressure seems just fine currently however due to recent current events this is subject to change without prior notice.
Bumping this, maybe some of our residents who agree with McConnell will explain why bankruptcy is a good idea.
Trump did it like 3 times and then became president. It's great.
Kentucky is yours for $500. But it comes with Mitch. Plus you have to pay Calipari.
There might be a couple of things that get replaced during the remodel/flip.
Will not states/local be forced to lay off lots of teachers, police, fire, etc? Is that good?
The adoption of the Constitution hinged in part on the Federal government assuming the states' debts incurred during the Revolution. Think the Tea Party would get on board with that?
Not true any more in most states. Most states like Indiana have changed their rules so that public safety employees have to wait until they reach a certain age to start drawing retirement benefits. I believe it is 52 in Indiana. You can retire before you reach that age but cannot draw benefits until you reach that age. Most states recognized the old systems were a disaster for the state and made the changes.
I don’t think judges and prosecutors even have to work 20 years. I think they need to win 3 or 4 four year terms. They then get their full salary in retirement and the benefits increase as the current pay increases.
Defaulting on bonds would be devastating to some investors.
I don’t know. Depends on each jurisdiction’s circumstance. I do know that the public employees who are being furloughed now are the grunts. The suits who make these decisions are “working” at full salaries + benefits. Somebody needs to ask Cuomo about that next time he says first responders are at risk. Also, I don’t think the feds have the means to pay all of the state and local obligations.
The Governors are asking for "at least $500 billion". Roughly the amount the deficit raised per year from Obama's budget to Trump's. We cannot afford $500 billion?
Last week, the bipartisan National Governors Association called on Congress to provide states with “unrestricted fiscal support of at least $500 billion” to avert “significant reductions to critically important services all across this country.”
From https://www.google.com/amp/s/nymag....-needs-to-bail-out-states-and-cities-now.html
As a stop-gap measure they can but I will pose a question you can apply broadly how are state unemployment benefits supposed to be paid when the businesses that fund the system are closed?? It’s a snake swallowing it’s tail you try and stay away from the head but we are rapidly working are way up the body, metaphorically speaking. That makes sense to me your mileage may vary.
It's not just $500b. The total federal outlay for the virus is approaching $3 trillion. The question you and @Digressions need to ask is if there is an upper limit, and if so where?
The governors asking for bailout money is entirely predictable. States are required to balance their budgets, the feds are not. That means the states must set priorities and the feds not so much. I don't think the states asking for these funds is so much about need. Instead it is more about avoiding hard choices about where to spend money.
All levels of government are taking an enormous financial hit though more expenses and less revenue. State and local government needs to step up to the plate and make the important choices. I know from first hand knowledge that there is substantial dead weight in government. Threats to cut front line first responders is BS so long a state and local government keep intact other less important bureaucracies. For example, is it more important for a city to have a fully staffed planning planning department or a police department? Even within law enforcement there is dead weight in the highly-compensated administrative staff. All levels of government have overlapping and duplicative services, not because they are needed, but because they are seen as attracting voters. Examples are all over the place.
Thirty years ago the Grace Commission issued its report on federal government waste and mismanagement. A big part of that was duplicative services across numerous federal agencies. State and local government are the same. Nothing was done to put into effect the Grace Commission recommendations. Instead the deficiencies have gotten much worse in federal, state, and local government.
I'm as much in favor of cops, firefighters and teachers as the next guy. But I am also in favor of business and the economy--which we need to pay the freight of cops, firefighters, and teachers. As I am writing this, I know there are millions of people seeing their savings, retirement funds, college funds, and home equities melt away day by day. I was a smal business person and that could have been me 30 years ago. (It pisses me off no end to see people like Pelosi talking about coping by eating ice cream--she has no clue.) Beyond continuing with essential services, the very first priority of the federal government needs to be to support and preserve the economy which mostly centers around small business and private sector jobs. Without that, nothing else will matter. If, after state and local government has made the choices and done all it could to keep needed front line workers on the job, then I'd be willing to re-look at the issue.
For now, all the governors want is to have the feds bail them out to preserve their status quo. This pandemic could and should cause all levels of government to focus on essential services and cut the duplication and non-essential services.
End of rant.
Gotta love it. COH answers Marvin's question by dismissing his question and posing a completely different one.
I am tapping out. He did not care in the least when Trump upped deficit spending by $500 billion per year in the middle of an economic expansion. That is when one should not be at all running a larger deficit. But I am certain I can find posts by him saying to pay no attention to those increases, they did not matter.
Now that amount is a crisis. Now it is obvious states easily waste $500 billion a year.
My two recommendations for Colorado, eliminate all bike lanes and paths as we all know those are non essential. And raise licensing for lawyers 1000 fold, no one can name a thing a single lawyer has done to defeat COVID.
Cuomo seems to say the stock market will collapse if states declare bankruptcy. I am not sure about that, but I bet a lot of 401k plans get hammered. I bet a lot of people that moved their money to safety moved to state bonds. I think Cuomo is right, have 4 or 5 big states declare bankruptcy and watch the election. I suspect those people holding state bonds will vote D.
State bonds blowing up would hammer everyone involved in institutional money management. Like pension funds, insurance companies, bond mutual funds, all the balancing/target retirement funds (and many others I don't know about.) And it would eventually carry over to the stock market.
You should tap out. You don't understand your own point. You asked about the governors looking to Uncle Sam to bail them out in these times. That is the question I addressed. The $500b amount is a side show.
A bankruptcy reorganization could also make G.O. bonds more secure no? Interest payments would likely be delayed but that is a small matter. Revenue bonds might be a different matter. I don’t think they go into default, but some of terms would be renegotiated. If we expect the feds to guarantee revenue bonds I think would be setting an awful precedent.
Yep, I think Cuomo is right. A lot of pissed people will remember who told the states to file bankruptcy come November. So obviously Mitch will NOT move to allow bankruptcy until next year. That means states will be forced to slash and burn everything. There will be no choice, not enough money is spent on CO's wasteful bike lanes to offset this. So states will slash teachers, fire, police, guard spending, road construction, higher ed, etc. That will cause massive layoffs. So come November, we will have a really high unemployment rate even if we somehow solve the riddle of COVID. And we will have people's retirement accounts ravaged.
McConnell was playing politics and calling it the “blue state bailout.” As is typically the case with McConnell, he was being intellectually dishonest.
CUOMO POINTS OUT KENTUCKY GETS MORE FEDERAL FUNDING THAN NEW YORK IN RESPONSE TO MCCONNELL'S BANKRUPTCY COMMENTS
“For years, Kentucky has received more federal funding per capita than at least 45 of its neighboring U.S. states. According to reports from PEW Research Center, it also ranks among the most federally-dependent states in the nation, with federal funds composing at least 38 percent of its annual state revenue. In comparison, New York has contributed billions more in federal taxes than it receives in spending since at least 2016.“
https://www.google.com/amp/s/www.ne...-response-mcconnells-bankruptcy-1499906?amp=1
CUOMO POINTS OUT KENTUCKY GETS MORE FEDERAL FUNDING THAN NEW YORK IN RESPONSE TO MCCONNELL'S BANKRUPTCY COMMENTS
“For years, Kentucky has received more federal funding per capita than at least 45 of its neighboring U.S. states. According to reports from PEW Research Center, it also ranks among the most federally-dependent states in the nation, with federal funds composing at least 38 percent of its annual state revenue. In comparison, New York has contributed billions more in federal taxes than it receives in spending since at least 2016.“
https://www.google.com/amp/s/www.ne...-response-mcconnells-bankruptcy-1499906?amp=1
The difference between state federal tax payments and state federal disbursements is a red herring. It means nearly nothing in terms of state structural debt, income, and cash flow.
WTF is wrong with you??? Tax cuts pay for themselves, dumbass. Everyone knows that. Sheesh.
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