Bail out on bailouts

Federal government cannot continue fiscal rescue missions on failing states

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The governors, legislatures and people of every responsible U.S. state ought to demand it. Now.

Congress needs to pass, and the president needs to sign, a bill pre-emptively prohibiting any federal bailouts of overspending states.

In Europe, some countries have patiently bankrolled Greece and others – without much regard for whether the recipients were worthy, responsible, intelligent risks. Or whether it was fair for thrifty, hard-working nations to be subsidizing fat benefits and padded pensions in other countries.

The same could happen here.

As the states are run differently, and feature varying economic
climates for businesses, it’s inevitable that some states will be in better shape than others. Would it be fair, or even wise, for responsibly-run states to be asked to bail out irresponsible ones?

“There will not be a federal bailout of the states,” House Majority Leader Eric Cantor said as early as January 2011.

Let’s hope he can make good on his word. But if a state hits the wall financially – California is facing a $16 billion deficit, and is hoping it can tax the rich to save itself – the sob stories will hit CNN, and there will be a lot of emotional pressure on Congress to act.

Some have called for a special “state bankruptcy” bill to smooth the way for troubled states. We’d be against anything that encouraged continued irresponsibility. But anything that builds a firewall around a melted-down state and prevents bailouts is worth considering.

States have governors and legislatures that are elected to lead them down a sustainable path. If they fail, they ought to live with the consequences. They sure as heck shouldn’t be able to tax the citizens of other states to pay for their incompetence or weakness.

Yet, Washington has stepped in before – although it turned down California’s request for $8 billion a few years ago.

The pressure on Washington is only likely to increase, as more states come to a day of reckoning with the unsustainability of their public employee benefits and other spending.

Sen. Jim DeMint of South Carolina and Rep. Kevin Brady of Texas co-wrote an op-ed in the Wall Street Journal Tuesday titled “Say no to state bailouts,” in which they explained: “Years of overly optimistic growth projections, underfunding and overpromising by politicians have rendered many of these public pension systems effective toxic assets on states’ books. Some jurisdictions around the U.S. already spend more money on retired workers than on current employees, and more on retired teachers than on existing students and schools.”

Other policies that drive away business investment will leave such states in even worse shape.

“It is becoming clear,” the two wrote, “that the only way to force recalcitrant states to put fiscal reform on the table is for Congress to take state bailouts off of it.”

The message needs to be: Get your own house in order. Don’t come knocking on ours.

Comments (17) Add comment
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TParty
6003
Points
TParty 05/16/12 - 12:06 am
3
0
"If they fail, they ought to

"If they fail, they ought to live with the consequences."

This is exactly right. The previous governor of California put some items on that ballot that were hard. They needed to raise taxes some to pay for the things they wanted, and cut some things that were wasteful, inefficient and expensive.

What did the voters do? They said "Nope, I don't want to pay for it, so no to raising taxes. And I vote yes for more expensive projects, and other cool things."

"If they fail, they ought to live with the consequences." That sums it all up for me. Well said.

I'm curious to see if liberals will find a way to deflect this, or come up with an argument of not sleeping in the bed you made for yourself.

avidreader
3377
Points
avidreader 05/16/12 - 06:18 am
1
0
Greece vs. California

If one pays close attention to domestic and world news, it is not difficult to weigh the similarities between Greece and California. Both are bloated economies with no hope for survival unless their politicians accept their lumps and make some wise, but unpopular decisions.

Thank God, Georgia is a balanced-budget state. It would be criminal to ask our hard-working taxpayers to bail out other states that continue to spend freely and unwisely. Plus, our federal government is already in shambles financially. Maybe Brad & Angelina, Tom Cruise, and Barbra Steisand can pitch in some dough.

Techfan
6461
Points
Techfan 05/16/12 - 06:25 am
2
3
Maybe if states received an

Maybe if states received an equal amount in funds from the fed that they pay in taxes, California wouldn't have a problem. Of course most of the red states would be in deep doo doo.
http://taxprof.typepad.com/taxprof_blog/2004/09/red_states_feed.html

omnomnom
3964
Points
omnomnom 05/16/12 - 08:21 am
1
0
Augusta/Richmond County

Augusta/Richmond County government cannot continue fiscal rescue missions on failing corporations (or their subsidiaries)

carcraft
27058
Points
carcraft 05/16/12 - 08:55 am
3
2
Gee, Maybe Cloney could hold

Gee, Maybe Cloney could hold a few fundraisers to bail out the People's Republic of California, instead of fund raisers to make America a more communist country by helping to reelect Obaumbler! Where is Jon Corzine when the Democrats really need him????? He coould bring his MF Global fund expertise to California..BWAHAHAHAHAHA

allhans
24011
Points
allhans 05/16/12 - 12:33 pm
1
1
Obama doesn't even know his

Obama doesn't even know his own worth, how can he bail out anybody. :(

allhans
24011
Points
allhans 05/16/12 - 09:26 am
1
0
That should be 2.6 and 8.3

That should be 2.6 and 8.3 million dollars....See?

crkgrdn
2287
Points
crkgrdn 05/16/12 - 10:07 am
3
0
Before a recent experience in

Before a recent experience in Oregon, I thought that sometime in the future the more responsible states through the federal government would be bailing out fiscally irresponsible states.

The front page of an Oregon newspaper announced that the governor had recently visited with DC officials and was promised $1.9 billion to prop up the state's healthcare system over a 10 year period.

Oregon's state budget is as precarious as California's budget. And, of course both are blue states.

Oh, and gasoline is a dollar above what we pay. And, we saw 87 octane gas for $4.69 a gallon. The state has one refinery and it is down for repairs.

faithson
5265
Points
faithson 05/16/12 - 10:32 am
1
2
pay back

right, let them die on the vine... suck the marrow out of the bone and see how the patient responds. The big problem across America these days is this notion propagated by the likes of Grover Norquist for the last 30 years that there is something wrong with paying taxes. California is et up with republicans who want to 'keep it for themselves' and thus the few 'have' at the expense of the many.

Jake
32894
Points
Jake 05/16/12 - 11:07 am
0
0
Woe Is Me

We definitely have our share of problems here in the Golden State, errrr, I mean Fools Gold State. I believe that Gov Brown is addressing these as best he can but he will surely find it difficult to convince the GOP lawmakers that taxes will have to be raised. Some austerity measures have been in place for the last several years and more are being proposed. Problem is none of the groups effected by budget cuts are liking their piece of pie being smaller.
Having 2 children in the public school system here since 2002, I have seen the gradual depletion of funding and it's effects. So what do you do when the music, arts, gifted child and other programs are de-funded? Well, you do what we did here in the Redwood City School District. You organize a Foundation and fund raise. That's right, get off of your can and hold fundraisers and pull the checkbook out. We were able to save these programs because we are putting our money where our mouth is.
There is a measure for vote this fall about increasing taxes. Something needs to be done in this state because the fiscal irresponsibility of BOTH parties is what has gotten us to this point.
Another point of contention with many citizens is the illegal alien situation that has been a huge drain on funds because of their need for Health and Social Services. Gov Brown wants to cut their budget as well and, of course, is getting much criticism about this.
But we are adaptable here and will make the best of it unless the grapes in Napa and Sonoma counties start to die and then you will see rioting in the streets.

carcraft
27058
Points
carcraft 05/16/12 - 12:17 pm
2
0
America is going to have to

America is going to have to go on a diet... We just can't give everybody something for nothing, give union workers billions in benefits and expect everything to be honky dory! America can't keep running up trillion dollar deficits and not encounter inflation as massive volumes of paper dollars are dumped into the economy. Now tell me all about all those beat down poor people! http://www.sodahead.com/united-states/pelosis-daughter-enrages-left-with... that’s our tax dollars. Obama has wasted billion’s on one green energy failure after another. Yet you tell me we can’t cut government spending?

carcraft
27058
Points
carcraft 05/16/12 - 12:20 pm
0
1
Be fair to Obama

To be fair to Obama, his wealth is in a blind trust so he probably doesn't knw his real worth. That is done so he can't use insider trading to increase his bottom line. Like most presidents he will have to wait to get out of office to do that!

carcraft
27058
Points
carcraft 05/16/12 - 02:18 pm
3
0
Jake I agree with you about

Jake I agree with you about illegal aliens. I work at a hospital here and an illegal alien that was being treated (with out reimbursement to the hospital of course) wanted the parents brought here to help look after this individual. I told the alien why don't you go home and they can look after you there. He really didn't like it very well! California spends billions in welfare, health care and education of illegal aliens and if you , as a state, try to do something about the illegal aliens Eric the idiot Holder and company will attack you , look at Arizona!

allhans
24011
Points
allhans 05/16/12 - 12:37 pm
2
0
One would think that all the

One would think that all the millions collected from the entertainment community in CA for the Obama campaign would have been better used in their own state. Surely, you should see to your own house first.

Jake
32894
Points
Jake 05/16/12 - 03:01 pm
1
0
Services

carcraft, I would be the last one to support withholding needed services to any individual in dire need. That being said, many individuals who receive services are not in a "dire" situation, you know, life or death or starvation, etc. That is the problem here. But given our geographical location we have been and are going to get an influx of illegal aliens. California is a very expensive place to live, even in the remote rural areas. Like the Woody Guthrie song, "California is a Garden of Eden, a paradise to live in or see, but believe it or not, you won't find it so hot, if you ain't got the Do,Re,Mi". We have a huge problem and I am not sure how to solve it and neither does anyone else because it has gotten so large with many side issues.

allhans, The entertainment industry is by and large out of touch with reality, common sense and the common person, just like our elected officials. Schwarzenegger and his GOP crowd did the same type of fund raising, they all do it.

Jane18
12332
Points
Jane18 05/16/12 - 04:33 pm
2
1
True, so true!

Jake, you hit it dead on when you said "The entertainment industry* is out of touch with reality, common sense and the common person, just like our elected officials". The point I am trying to make here is.....look at how they vote!!Bailing out a state, a business, etc., would be like me wasting or throwing away my money, and then going to Techfan and expecting him/her to "help" me. It would not happen!! *actors, singers, sports figures, television and radio personnel....

Retired Army
17512
Points
Retired Army 05/16/12 - 05:41 pm
2
0
Isn't an amazing turn around

Isn't an amazing turn around when "wealth envy' involves the folks you think shouldn't have it because they support the folks you don't?

allhans
24011
Points
allhans 05/16/12 - 10:29 pm
0
0
RA, Not so amazing. We've

RA, Not so amazing. We've been watching it for 3 years...

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