A post by Maynard
Dick Morris, being a political animal, should be taken with a grain of salt. But his current article, “The Next Big Crisis: State Bankruptcies”, is probably a fair prediction of what looms on the near horizon. We’ve been hearing of the failing finances of California and New York and Michigan. What’s the endgame of these worsening crises? I’m in California, and I get the impression that the state must ultimately go through some sort of bankruptcy cycle. That’s the only way it can be relieved of unfunded pension obligations and sweetheart deals given to the unions in better days.
I don’t want to be cavalier about bankruptcy. A state has never gone bankrupt, so we don’t really know what it means to do so. Morris notes:
There is currently no legal procedure for a state government to go bankrupt. Congress, especially if it is Republican in 2011, should pass a mechanism that permits states to discharge in bankruptcy their collective bargaining agreements and contracts with their municipal unions. Of course, this procedure would have to let school boards and local governments do likewise.
Obama will veto this bill, and a stalemate will ensue.
So Morris is suggesting that the Republicans lay the foundation for a legal pathway through the wilderness. The vision will have appeal, and a lot of people will agree this is probably the best way forward. But of course the Democrats will block it to protect their cronies. What happens then?
On the left will stand Obama, the unions and the Democrats demanding bailouts for the states and, truly, an end to our federal system of government. Once Washington guarantees state debt and spending, there will be no more state governance, only national rule.
On the right will stand a Republican Congress refusing to do so unless the states declare bankruptcy and cleanse themselves of the union agreements that got them into trouble in the first place.
I can’t say who will win this fight, but it’s an important one. How the states wrestle with their woes will become another major battlefield in Washington’s war on America. Perhaps Washington “rescues” us with its endless flood of borrowed money, and ends up taking control of the vulnerable states. Or maybe the states will finally be compelled to address the corruption and cronyism that brought them low.
Honestly I have to agree that they need to shed the deals set up by the unions. I am a union man myself. FOP Post1. But then again our union hasn’t tried to get us sweetheart deals for retirement or healthcare or pay or anything else. Our union does what unions were originally meant to do, they stand by the employee when the Supervisors and Management try to do things they honestly shouldn’t do.
Unfortunately too many unions have done things that are honestly disgraceful, in the name of standing together with the common worker. They’ve come up with retirement systems that allow the “retiree” to come back into their old position at reduced pay but also receiving their retirement pay at the same time. I honestly can’t understand why bureaucrats need unions.
Back before Social Security and unions for every possible job people saved. They worked hard and they saved up as much as they could and when they grew old and couldn’t work anymore they retired and lived on what they had saved. Aditionally their families took care of them. I guess I’m a traditionalist in that respect. My parents took care of my grandparents when they could no longer care for themselves. Well, they did until my grandfather passed. I have every intention of caring for my parents when the time comes.
My father receives a retirement from the Military, but he was a career soldier. My mother has no retirement, she was a nurse and homemaker, but was never in any one job long enough to receive a retirement. She is covered by his military medical benefits. My father Earned that money with his service, sweat and blood. No union gave it to him or bargained for it.
Back when I was growing up I was in Clarksville TN. Acme Boot (some of you may know of them) had one of its main factories there. Several years in a row the union demanded short contracts, and each year they demanded a pay raise. Not a cost of living bump, a full 10%+ Pay raise. They demanded lower and lower medical insurance payments. They demanded more vacation and sick leave. This was a union shop to the point that if you worked for Acme Boot and weren’t management you Were union. And they went on strike every year to force the issue. And Acme was forced to charge more and more for their boots to offset their profit dropping. This went on for several years until finally Acme Boot moved the factory to Puerto Rico. Their quality fell off for a couple of years and their production went down significantly. But their prices also lowered. They were still able to make profits and after a while their quality was just as good as it had been back when they were made in TN.
Sadly the states don’t have that option, they can’t go elsewhere to relieve the pressure from the unions and the Bargaining agreements they’ve been forced to swallow. Admittedly in a lot of cases it has been liberals allowing these unions to run amok, so it is time for the conservatives to come in and fix the issue. I hate to see states going bankrupt, and I will curse and rail against the death of the federel system and The Republic being gutted in this manner.
As an unemployed Michigander I humbly suggest that the Big Three, hobbled by year after year of unsustainable UAW contracts, should stop producing cars and start making tin cups.
I’ve already concluded (barring a miracle, but that’s a whole different matter) we as a nation are past the point of no return, and that the best we can now hope for is a delay of the inevitable. I sincerely hope my aged parents don’t have to face the turmoil I fear is coming, and I’d rather not face it myself, but I’ll do what I must to survive.
A Market Watch report I read when I checked on my 401K seems especially poignant.
How to profit from a slipping U.S. economy
http://www.marketwatch.com/story/how-to-profit-from-a-slipping-us-economy-2010-06-23
Waiting for Nevada to declare bankruptcy. Las Vegas is already known as the Detroit of the West.
Following up on Mrs. Malcontent’s comment, Steven Crowder did an excellent video on Detroit and makes an ominous prediction at the end:
http://www.youtube.com/watch?v=1hhJ_49leBw
Technically, federal law does not provide for a state to go bankrupt. I’m sure there will be some amendment to the bankruptcy code to accomodate it. I think a panel of three bankrupcy judges would be needed. Bankruptcy judges have expertise in economics and other diciplines besides just law. They could treat the state as they would a large business entity. They would be able to make the decisions politicians won’t make, like killing entire programs that other states don’t have. In California, they could:
1. Disband the state employee retirement system, and force the state to pay every state worker his contribution and it’s match into a 401K type account, and impose a special tax to pay the workers already in retirement. Or turn the whole mess over to the federal resolution trust guarantee, where they will recieve 25 cents on the defined benefit dollar, like the bankrupt airlines did.
2. Disband CARB, and let the federal EPA regulate air quality as it does in 49 other states.
3. Eliminate all welfare state supplements, and only pass out the federal standard welfare payment.
4. Elimiate all the boards that Swartzenegger said he was going to kill. Just make them entirely unpaid.
The list goes on forever, and the average private paycheck earner would hardly notice the difference.