Maybe it's tempting to stick it to public unions and fat pensions, but the idea of enabling...

Maybe it's tempting to stick it to public unions and fat pensions, but the idea of enabling states to declare bankruptcy is a "dangerous" idea that would roil municipal bond markets and create more problems than it solves. Politicians already have the power to fix these issues - they just have to use it.

Comments (22)
  • kmi
    , contributor
    Comments (4738) | Send Message
    This is not a real world arguement. In the real world, the tools this guy thinks Governors have, are usually ineffective or useless. Just as a Governor may threaten "mass furloughs" or whatnot, the unions can always come back and say "just float a bond."


    In fact it's probably easier in most cases to issue debt than to fight the unions.


    Bankruptcy offers an opportunity for no BS real restructuring.
    24 Jan 2011, 06:25 PM Reply Like
  • Pathfinder's
    , contributor
    Comments (227) | Send Message
    Fact is, the Unions made high cost demands, and the politicians agreed to the demands. Then, the politicians, made no effort or intent to pay for the cost of the pensions and benefits. None.
    And now, the non attentive tax payer will have to bear the burden, at a higher cost, and without a plan to rework or eliminate the current ultra high pensions and benefits.


    One of these days the Voter will wake up, One of these days.
    24 Jan 2011, 06:56 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
    As a Libertarian I am no big fan of government unions - but is it really fair to dump the whole mess in their laps?


    Certainly, these too-sweet deals are problems, but are we missing the forest of problems while staring at a few fallen leafs?


    Just for starters, if I were a negotiator for the unions I would pull out the state (county, city) budget documents from 10 or 20 years before, then compare them line item by line item. Sure, there would be plenty of areas where my union guys were getting some of the money, but can anyone doubt that entire departments, functions and entitlement classes just weren't even THERE back when?


    This is a case where some forensic economic history could be very interesting, and might tell us who we need to be fingering as the "bad guys".


    I would expect that some fraction WOULD apply to unions suffering from too much of their own success...


    But the bulk would be found in special interest group demands and bureaucratic featherbedding on a mammoth scale.
    24 Jan 2011, 06:57 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
    Not sure it is entirely fair but the real question is can the taxpayers continue to pay for all of these workers and huge benefit packages at all levels of government for any length of time? IMO the answer is no and not long because there is no place to go with more taxes without causing all kinds of dislocations in the economy and capital flight out of the country and deficits keep going up. And going through a process like you suggested would only kick up a lot of dust and delay and obscure what really needs to be done. If I am a union guy I would probably prefer your approach as it helps me delay and look for a way out.


    I also don't think any political party or politician will support your approach when the investigation gets too close to their special interest group's featherbed and every featherbed has some politician in it rolling around with a special interest group. Therefore no featherbeds will be thrown out.


    This will probably end up being a cram down to a specific budget number and will not be very pretty. Kind of like Greece.


    We should not have unionized government employees anyways. That is ridiculous. We might just as well unionize the armed forces.
    24 Jan 2011, 08:50 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4297) | Send Message
    The states are sovereign. Bankruptcy is a non sequitur. Do you think any governor is going to allow some bankruptcy judge to take control over the state's finances? I can see it now, the unsecured public unions demand the sale of the state parks to satisfy the funding of their pensions or, worse yet, the judge imposes confiscatory taxes.
    24 Jan 2011, 07:26 PM Reply Like
  • Glocks-n-Gold
    , contributor
    Comments (211) | Send Message
    Wonder how many of the currently 23% unemployed (of which I'm a member) would happily do these union jobs for not much more than minimum wage. Seems to me, a smart Governor (if such an animal truly exists) would be interested to find out.
    24 Jan 2011, 07:32 PM Reply Like
  • spald_fr
    , contributor
    Comments (2814) | Send Message
    I believe this governor in Ohio, John Kasich, is capable of what you suggest.
    24 Jan 2011, 09:51 PM Reply Like
  • Silver-Back
    , contributor
    Comments (34) | Send Message
    Either way americans are going to have a lower standard of living, higher taxes with lay-offs or jobs that pay less. A massive conversation on finance needs to be undertaken by all parties for the good of all constituents....
    24 Jan 2011, 11:10 PM Reply Like
  • Glocks-n-Gold
    , contributor
    Comments (211) | Send Message
    Sadly, I have to agree with the first part of your statement. As for the needed conversation, if past is prologue, the unions would be conspicuous by their abscence due to all members hoisting their signs de-jour in a massive strike. Then when they are summarily fired (I know, just dreaming...) they'll claim some sort of discrimination because they were "shut out" of the conversation.Meanwhile, America continues her slide....
    25 Jan 2011, 12:59 AM Reply Like
  • Silver-Back
    , contributor
    Comments (34) | Send Message
    I really wish that you argument wasn't sound, but in life we know that reducing one's standard of living is usually not accepted with dignity and honor. Even if it ensures the future, because at the heart of it one person is gonna believe thy got scammed out of their fair share.
    25 Jan 2011, 11:45 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4498) | Send Message
    Let the munis come in.


    Just let them keep coming in, closer, closer. Almost. Not yet. But almost.


    Don't buy until you see the whites of their eyes.
    24 Jan 2011, 07:33 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4498) | Send Message
    I also think bankruptcy will cause the rest of the guvnuhs to fall in line like good children. Not with this Congress. Whining won't work. Every Repub that just got elected would face a defeat in the next election cycle if they voted to bail out the purple shirt SEIU.
    24 Jan 2011, 07:45 PM Reply Like
  • stocknerd
    , contributor
    Comments (1503) | Send Message
    Let the revolution start! Hey let some munis go under and panic set in. I'm a BIG buyer in chaos and confusion when others are fearful.
    24 Jan 2011, 08:15 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4297) | Send Message
    You sound brave. Do you live in the country and grow your own food? I'm a city dweller and, even on a good night, I hear the shots going off and read about the murders the next morning. No one cares that we lose more people to murder in our country than to all our wars since Viet Nam. When the revolution comes, I hope I'm somewhere else. But I'll be buying the dips.
    24 Jan 2011, 09:38 PM Reply Like
  • User 487974
    , contributor
    Comments (1101) | Send Message
    Look this is math kids, pure and simple. Until the unions are seriously willing to give back at least 50% of all their wages/benefits, we are just talking shit.
    50% of something is better than 100% of nothing. All civil service employees{and I speak of experience here, local 100} take the oath of office.You work "FOR" the public. It is your civil duty to put the greater good{the country} ahead of your overly fraudulently promised booty{which you do have every right to}, to focus your attention where it should be directed.The scumbag union rep's and on up to the real pricks here,{Schumer,Dodd,Frank et al} progressive politicians...
    The depression will clear the field to start over again. Question is, do you want to have a say in what is spared? The depression will be a scorched earth policy. The top will survive,the 98% of the rest of us? Welcome to the pits all you ex-union workers, this is what lower middle class feels like...Your socialist leaders{think Andy Stern, Trunka} will lead you all to the wall. Again, will you have any say into how "you" make out? If I had any choice,any say? You bet your ass I'd be like,"W.T.F." about the working man? You who the true "Forgotten Man" was in the depression? You guessed it, the working man. This is not going to end well, even best case is a 5/10 year economic slog/ readjustment to a lower standard of living. You and our generation? Not to bad, all our innocent children, can never gain our standard of living. Maybe two generations to feed your piggishness. The me generation was a colossal flop,look back inward. Do more with less. Rely on friends/family/church. Look to get back to basics. What good will your 4th "I-pad" be,can you eat it? Think again, for yourself, We are America. We will take the hit, and be better for it. But the "Collective salvation" and any Collective bullshit is not the way to go. Individuality baby! That's where we need to get to....
    Personal responsibility. What a concept?
    24 Jan 2011, 08:19 PM Reply Like
  • ilmor
    , contributor
    Comments (17) | Send Message
    What would happen is this...the liberal states that declare "bankruptcy" would reject all BUT the Union contracts...and pay the Unions...and the entitlements. This is the reason, and the only reason, for this "bankruptcy" idea. Don't let them get away with it!!!
    24 Jan 2011, 09:05 PM Reply Like
  • TeresaE
    , contributor
    Comments (3041) | Send Message
    So does this magic fix-all use the almighty power of Benny's Printing Presses?


    I'm sure it will, no matter the form it takes.


    And we have a long way, a lot of money and considerable pain for US (taxpayers, savers, business owners), long before a state uses bankruptcy to get out from under their contracts.




    Michigan has been "fighting" a looming deficit for nearly all the past nine or so years. Michigan has the 3rd best paid correction officers, 5th best paid cops, 6th best paid teachers, 3rd best paid Governor and the largest "First Spouse" budget in the nation. NONE of those things have changed one iota.


    Some furloughs, some hiring freezes (though the tax department was gifted hundreds more employees), higher taxes, fees, fines, penalties (we pay $400 in "Driver Responsibility" fees if we get pulled over without proof of insurance - lose the paper, pay the fines, even IF insured), registrations, licenses, etc., etc. Our roads are no longer salted and plowed the way they were just 10 years ago. These are just off the top of my head, we have been hit harder.


    And yet, NO MEANINGFUL CHANGE. Which means, we are going to keep stop-gapping, robbing Peter, Paul and Mary Taxpayer, creating criminals to create revenues and gifting the unions AND mega-business the breaks.


    For Michigan, and more than likely for the rest of the states, this is primarily how things are going to continue until the rest of us have nothing left to give the bloodsuckers.


    Muni bond market, please. The FIRST people to lose their butts will be the bondholders. Look at GM & Chrysler and see the truth for yourself. ALL of us will be sacrificed for the government cash cow.


    Although, for those that have the balls, and the luck to pull out at the right time, there will be major money to be made.


    I'm not lucky though, so I leave that to those that believe they are.
    24 Jan 2011, 10:05 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
    You are really living the dream up there in MI and I am sorry.


    I think your words have wisdom in them. When the market falls will it just be a dip or a falling knife? For the first time I am thinking it could be the latter across all government bonds. If one state claims BR it will be tempting for others and investors will pull back and look for insured bonds and tangible assets, etc. Although even those types of best practices did not help in the housing credit meltdown so why should they help if the muni market melts down?


    And if the states default why not the federal government? This is a bond market and currency debacle. We need people in government to just start cutting spending because BR and defaults will be devastating.
    24 Jan 2011, 10:20 PM Reply Like
  • MrGhrelin
    , contributor
    Comment (1) | Send Message
    Horse feathers. It's not going to happen. It's all republican political rhetoric. If a company like GM fails and the pain is to great, the prudent thing to do is to bail them out. If sovereign States go bankrupt, the game is over it's time for Depression 2. No rational person would risk that.
    24 Jan 2011, 10:51 PM Reply Like
  • ebworthen
    , contributor
    Comments (2799) | Send Message
    Let's have the banks and insurance companies and corporations that stripped senior bondlolders of their rights and money (along with future generations of our children); let's see those TBTF bailout Cronies cough up some capital for the pensions?


    How about those high-rolling fat cats 'doing God's work" (*cough*...*gag!*) loan the pensions the money they need at 0.25% liike they got from the FED and let them make 5% on it? Should shorten the gap between 8% projected and 4% actual or worse, no?


    Oh wait, that would get too close to the line of helping individuals, who must remain on the gerbil wheels to crank out profits for the banking and government Kleptoligarchy.
    25 Jan 2011, 03:11 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2278) | Send Message
    > individuals, who must remain on the gerbil wheels to crank out
    > profits for the banking and government Kleptoligarchy.


    Just curious, what profits go to the government? Certainly not the lion's share.


    Who do you think is really in charge here? The people that end up making hundreds of millions of dollars, or the people that end up making hundreds of thousands of dollars?


    "But Mr. D_Viriginia, the government gets POWER!!! ...Don't they?"


    Do they? What part of the government gets real power? The president that can't get anything done without the support of big business and their armies of lobbyists? The congress in the same boat? Both of whom depend on elections that are basically decided by how much funds you have? The judges appointed by the same people? The federal employees who have no say in any of this?


    The treasury and the fed? Sure, but notice where all those appointees tend to come from.


    In those closed-door meetings in 2008, who do you think called the shots? I'll give you three guesses...
    25 Jan 2011, 08:07 AM Reply Like
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