The editors of the Wall Street Journal react to the shaking down of the federal government that high-spending states want:
The question to ask is why taxpayers in Appleton and Sarasota should rescue politicians and unions in Albany and Springfield?
“You know the state governments are broke, to use a very blunt term. You know the state governments are now responsible for the reopening and the governors are going to do the reopening, and they have no funds to do it,†New York Gov. Andrew Cuomo said Tuesday after making his case to President Trump for more federal cash.
The Governor blames the pandemic and recession, but states like New York were already in trouble from their own mismanagement. Mr. Cuomo warned for months about a $6 billion state deficit thanks to runaway Medicaid costs and taxpayers leaving his high-tax state. He signed a $177 billion business-as-usual budget on April 3 that allows him to borrow $11 billion if spending exceeds revenues. The coronavirus was already a clear and present danger.
Or take Illinois, where Gov. J.B. Pritzker in February proposed a $40.8 billion budget that included $9 billion for public pensions. Mr. Pritzker raised taxes in 2019 and wants to make the state’s current flat tax progressive if voters approve a constitutional change this fall. Yet he and the unions who own the state house have blocked pension or spending reforms.
They’ve long bet on a federal bailout, and they see Covid-19 as their main chance. Illinois Senate President Don Harmon last week sent a plea for a $41.6 billion federal bailout to his state’s Democratic Congressional caucus. He wants $15 billion in no-strings-attached cash; $6 billion for the state’s unemployment trust fund; $10 billion for pensions; and $9.6 billion in unrestricted aid for cities including Chicago and its unreformed pensions. Oh, and he also want the federal government to pick up 65% of the state’s Medicaid costs though Congress’s second relief bill already increased the rate to 56% from half.
Mr. Pritzker is now projecting a $7 billion deficit, which the state could staunch by furloughing nonessential employees or adjusting employee benefits to the level of private workers. Illinois’s unfunded pension liability increased 60% between 2010 and last year to $137 billion even as the stock market more than doubled. Public retirees in the state still get annual compounded pension cost-of-living raises of 3%.
I believe that the editors are mistaken in their claim that Illinois can solve its problems by “adjusting employee benefits to the level of private workers”. The state’s constitution prohibits public pensions from being reduced. Not only would they need to amend the state’s constitution, the courts would need to find that doing so did not violate Article I, Section 10 of the U. S. Constitution. I do not believe that Congress has the power to allow states to declare bankruptcy even if it should care to amend the federal bankruptcy code to allow states to declare bankruptcy for just that reason.
But notice another appearance of that word: mismanagement. These states’ elected officials didn’t mismanage their states’ affairs. They engaged in a corrupt program to defraud the citizens of those states and now they want to extend that to all of the people in the country.
What’s the difference between bankruptcy and default for a sovereign?
No one doubts that a state can default on its debts — which has happened in American history.
The only tangible difference with bankruptcy is the process goes through a Federal bankruptcy court instead of a State court (or whatever forum a State would legislate in such a scenario).
Illinois should not worry, with the Democratic tsunami coming in Nov, I imagine a bailout of the States will be top priority of President Biden (or his successor) and the Democratic super majorities in Congress.
CuriousOnlooker, should that Tsurutani be a GOP one, rather than a dem, how will those mismanaged states fare in addressing their debt?
The voters in the bankrupt states are not victims or bystanders. They are active coconspirators; they keep electing the same corrupt politicians, in the expectations they will get free stuff.
The solution is to strip these states of statehood and to impose federal territoriality upon them. They get a territorial governor appointed by the President, and they lose representation in Congress and their Presidential electors.
I know I said it yesterday, but it bears repeating. It is not just the politicians of Illinois and Massachusetts and New York and California, et al., that are corrupt, so are the people.
“I know I said it yesterday, but it bears repeating. It is not just the politicians of Illinois and Massachusetts and New York and California, et al., that are corrupt, so are the people.”
And they will continue to pull the Dem lever until they suffer the consequences. Otherwise nothing will change.
The odds of a GOP tsunami is approximately 0.
But whoever loses the election could be the lucky one.
Whoever is in charge come Jan 2021, will need to deal with
(a) possible bankruptcy / bailout of several States
(b) deal with all the debt at the Federal level from coronavirus
(c) control a potentially unpleasant amount of inflation
You tar with too broad a brush. I have never voted for Mike Madigan (I didn’t even vote for my own representative in the state legislature). I haven’t voted for anyone who’s been elected governor in more than 20 years. But I HAVE voted in every election. I’ve been voting for people who didn’t get elected.
Other than being an Illinois resident how am I culpable?
In terms of the City of Chicago, I DID vote for Lori Lightfoot. The alternative was Toni Preckwinkle. That’s the problem with your entire theory of the people being to blame. You choose between the choices you have not the choices you want. I didn’t vote for either one of them in the primaries.
” You choose between the choices you have not the choices you want. I didn’t vote for either one of them in the primaries.”
Isn’t that the binary choice people had in 2016 — it was either Hillary Clinton or Trump? Hillary was known for her corruption during years of public service, while the alternative, although uncouth and abrasive, was new to the political stage. That’s why people who didn’t particularly like him voted for him.
Now, in 2020, the binary choice will be between Joe Biden, a senile-acting, life-long politician who has always been on the wrong side of right thinking, and Trump, who many still don’t like for the same reasons given in 2016. It’s again one of those elections where you choice the best one of the choices given you.
“You tar with too broad a brush.”
I don’t know if that was directed at Bob, or me, or both. It seems a bit touchy. I do believe I give you a wide berth most of the time, out of respect for the thought pattern and all that you do here. However, I do believe you must admit, you often remind us that you are a Democrat, and you react accordingly. In any event, your criticism of IL pols in not lost on me, and I doubt on anyone.
Let’s get to the reality of the situation. The key IL pols are just execrable people. They have acted in a completely immoral fashion. You criticize Republicans for not engaging in the fools errand of running in IL. Well, its a fools errand. You may not be culpable, but IL voters in general are. I voted with my feet, at great cost. I guarantee I would have not moved away if not for IL folly and scumbaggedness (is that a word?). The southern outpost would have been secondary. Chicago was my home, and perhaps psychologically it will be forever. Great city. And after all, the Blackhawks need me. ;> But no one who is the target of these evil IL pols will stay. I used to cite this family or that who we knew. Its becoming a torrent of exits. A torrent. All high taxpayers. Good luck Dave. Good luck.
IL voters have allowed pols to bankrupt the state. And then they turned around and voted in the most idiotic motherfucker Guv during my adult life. IL voters have to own that.
Fuck’m. They will get it good and hard.
Drew,
The GoP has basically abandoned a lot of these areas or only put in minimal effort to promote vanity candidates.
I have African-American cousins who live in Detroit who are the biggest Trump supporters in my extended family. But they vote Democrat in local elections because there is no other choice. The GoP doesn’t give one rat’s ass about the people in Detroit and the same probably goes for Chicago and other areas. It’s too easy and lazy for the GoP to criticize these areas from afar and make zero effort to give voters there a real choice.
So it’s not just the voters and residents. If we are destined to have an entrenched two-party system where those two parties actively conspire to prevent competition, then those parties need to act responsibly and give voters a real choice and stop acting as if politics is a cartel.
I live in the most Republican-leaning part of Colorado, in the same district as Colorado Springs. The problem here is similar but not to the same extent in Detroit or Chicago in that the Democrats generally only run vanity candidates and give them almost no support, especially for local elections. Like a lot of other places, the way to win here is to adopt the GoP mantle and then try to beat the incumbent in the primary.
So I don’t think one can discount the corruption and bad incentives in the political system in assigning blame. Certainly, voting with your feet is an option but one that is a lot more difficult for someone without your wealth.