Gingrich Pushing Bill to Allow State Bankruptcy

[Big Smoothy]

This is big news. Why? Because this idea is even being floated.

Just a few years ago, this was unthinkable.

But things have change a lot in the last couple of years - and the projections are even worse for the future.

As noted, a city in the US recently reneged on pension payments to retirees - even though it's the law, to pay the pensions to them - but is there is no money to pay, then there is no payment.

By allowing for the filing of bankruptcy, those who spend decades working for the state are S.O.L. - Sh*t out of Luck.
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Newt Gingrich Pushing Bill To Allow States To File Bankruptcy Allowing Them To Renege On Pension And Benefit Obligations

Some unpleasant news for pensioned workers who believe that their insolvent state will be able to afford ridiculous legacy pensions in perpetuity. According to Pensions and Investment magazines, Newt Gingrich is pushing for legislation that will allow insolvent states to be taken off bailout support and file bankruptcy, in the process allowing them to renege on pension and other benefit obligations promises to state workers. And if there is anything that will get government workers' blood pressure to critical levels, it is the threat that money they had taken for granted is about to be lifted, courtesy of living in an insolvent state (pretty much all of them). And obviously what this means for equity investors in assorted muni investments is that a complete wipe out is becoming a possibility, as Meredith Whitney's prediction, which everyone was quick to mock and ridicule, is about to come back with a vengeance.From P&I:

Proponents of the measure ??? which include Americans for Tax Reform, a Washington lobby group that fights tax increases ??? said the legislation is desperately needed to clear the way for struggling states to slash costs before they go belly up, and should be regarded as a preemptive move that could preclude the need for massive federal bailouts.

???It's in the short-term and long-term interests of government workers and taxpayers to start those reforms now, rather than having to pick up the pieces after a crash landing,??? ATR President Grover Nor-quist said in an interview.

???We are working with people inside and outside of Congress on this issue,??? said Joe DeSantis, a spokes-man for Mr. Gingrich, whom Mr. DeSantis said is considering a bid to be the Republican presidential candidate in 2012.

Sure enough, the response has been fast, furious, and very vocal:

State and union officials vow to fight the bankruptcy initiative, which they fear would undermine state autonomy and be used to reduce promised benefits to government workers.

???I am unaware of any public pension plan that is requesting federal assistance,??? said Keith Brainard, NASRA research director.

???Exaggerated reports on the financial condition of public pension plans are being used as a scare tactic to justify federal intervention,??? Mr. Brainard added.

Said Mark McCullough, a spokesman for the Service Employees International Union, Washington: ???This is another right-wing attack on behalf of their (the GOP's) anti-middle class, big-business donor base.

???It would amount to not just another attack on working families, but an attack on everyone from investors to retirees who would see the economy reel from the ripple effects of state bankruptcy as they pursue the goal of making American workers expect no better pay or benefits than workers in the developing world.???

So far, proponents of the legislation said they have not yet recruited a congressional sponsor for the proposed measure. ???We're still shopping for the guy who is going to carry it,??? Mr. Norquist said.

Nonetheless, union executives are concerned that the proposal ??? which has been promoted on conservative websites recently ??? is part of a well-orchestrated and hitherto underground campaign now surfacing as Republicans settle into leadership positions in the new Congress.

???This idea carries major negative financial implications for the states, their creditors and the companies that do business with them,??? said Charles Loveless, director of legislation for the American Federation of State, County and Municipal Employees, Washington. ???A state going into bankruptcy would send shock waves through the states and could very well undermine our fragile national economic recovery,??? he said.

???It is incredible to me that proponents of this portray themselves as advocates of state rights when what they're really doing is driving states into the ground,??? Mr. Loveless added. ???It's clearly in an effort to renege on public employee collective bargaining contracts.???

The good news: not all states will file for bankruptcy if this proposal becomes law. Just most.


Entire: Newt Gingrich Pushing Bill To Allow States To File Bankruptcy Allowing Them To Renege On Pension And Benefit Obligations | zero hedg

 

[GearsMcGilf]

This is prolly just a shot across the bow to get the msg across that the fed govt must get its act together and for states to do the same and not expect any future federal bailouts. Sad thing is, it may take a few state bankruptcy filings in order to wake this country up.

 

[Dale Mabry]

This is prolly just a shot across the bow to get the msg across that the fed govt must get its act together and for states to do the same and not expect any future federal bailouts. Sad thing is, it may take a few state bankruptcy filings in order to wake this country up.

You're joking, right? If Goldman Sachs were going under they would be bailed out immediately. Remember, welfare is only bad if it goes to the poor.

 

[irish_2003]

i can solve california's budget woes.......give california back to mexico and put a huge border fence around it!!!

 

[bio-chem]

currently newt gingrich holds no elected federal office and has the authority of my left nut author bills before congress, or guide federal fiscal policy. this is a whole lot of smoke and mirrors political stupidity.

 

[DOMS]

currently newt gingrich holds no elected federal office and has the authority of my left nut author bills before congress, or guide federal fiscal policy. this is a whole lot of smoke and mirrors political stupidity.

You and your facts. Get that shit out of here!

Besides, you only hate him because he's black!

 

[Big Smoothy]

States are broke. Illionois, like other is....trying to abscond with as much money as it can....it's called, "raising taxes." It won't work. Band-ad on a bullet wound. This is a further example of how broke these states are. They're tits-up.
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Swimming in debt, Ill. considers massive tax boost
AP


By CHRISTOPHER WILLS, Associated Press Christopher Wills, Associated Press – Tue Jan 11

SPRINGFIELD, Ill. – Crippled by a massive deficit, Illinois has seen its bills pile up and its bond ratings fall. Now the state's Democratic leaders are making a desperate effort, and fighting the clock, to fill the budget hole with an equally massive tax increase.

They want to boost the personal income tax rate temporarily by up to 75 percent, pushing the current rate of 3 percent as high as 5.25 percent.

In sheer percentage terms, the Illinois proposal could be the biggest tax increase on the long list of increases states have passed as they grappled with recent economic woes.

"I wouldn't use end-of-days rhetoric, but it is definitely higher than we normally see," said Kail Padgitt, an economist for the Washington-based Tax Foundation.

The move is as difficult as it is bold. The window for action may be less than 24 hours, before Democrats lose some lame-duck lawmakers and a slice of their majority when a new General Assembly takes over on Wednesday.

"There's only one day left," House Speaker Michael Madigan, D-Chicago, said Monday night. Tuesday "is do-or-die."

Republicans reject the concept completely. Rank-and-file Democrats are pushing back by proposing strict new limits on government spending or a slightly smaller increase, perhaps 66 percent instead of 75 percent.

Illinois faces starkly different outcomes worthy of its extreme situation, where a deficit of $15 billion has built up over the years as officials have repeatedly avoided serious action. If the increase passes, Illinois could vault out of its budget hole immediately — at least until the four-year increase ends — while making the state a much more expensive place to live and work. Or Illinois could lose the only viable solution leaders have come up with, leaving nothing on the table that could fill a deficit that amounts to half the money in the state's key budget fund.

entire; Swimming in debt, Ill. considers massive tax boost - Yahoo! News

"temporarily." Yeah, Right. When the jobs and production, comes back again?

 

[Dark Geared God]

Amen get them state workers out of there.......
yes lam we know it is bush's fault

 

[bio-chem]

yes lam we know it is bush's fault

 

[Dark Geared God]

You didn't get the memo from KOS and moveon.org

 

[bio-chem]

You didn't get the memo from KOS and moveon.org

go ahead and forward that on to me

 

[Glycomann]

Amen get them state workers out of there.......
yes lam we know it is bush's fault

It's Bush's fault.

State's regularly raid pension funds to balance budgets so it's no surprise when lean times crop up there is no money for them current responsibilities including pension obligations. They are not suppose to raid them but state government loop holes have allowed them to do so in many states.

 

[LAM]

currently newt gingrich holds no elected federal office and has the authority of my left nut author bills before congress, or guide federal fiscal policy. this is a whole lot of smoke and mirrors political stupidity.

another "great" idea from that douche bag...

YouTube - Gingrich says we should ask rich how much tax cuts they want

 

[Dark Geared God]

go ahead and forward that on to me

well do and i'll fax u the report from the huffington post ..nothing but truth there

 

[bio-chem]

well do and i'll fax u the report from the huffington post ..nothing but truth there

ill be sure to look that over during my morning dump

 

[Dale Mabry]

Political affiliation aside, does anyone here believe we are going to raise enough money to cover a $14,000,000,000,000 debt without significant tax increases? Before you answer, realize that $255,000,000,000 would need to be cut from the yearly BUDGET to ensure no more is added to the debt. So, if the GOP were somehow able to cut $100,000,000,000 from the budget, which they have since stated will be more like $50,000,000,000, we will still be adding $155,000,000,000 every year to that debt. Shitty times are a coming, and I don't care what the GOP says, taxes are going up big time for the well off, much higher than the rates before Bush. All they are doing now is kicking the can down the road a couple years. I am fascinated that most people can't see this simple math. If I were to guess, they will mask it as tax reform, but whether the raise in revenue comes from an increase in the tax rate or a reduction in loopholes and deductions, pretty much everyone will be paying more, and soon. Passing the Bush tax cuts was done just to appease the GOP base and prevent a tax increase on people in the short-term (12 months or less).

 

[bio-chem]

Political affiliation aside, does anyone here believe we are going to raise enough money to cover a $14,000,000,000,000 debt without significant tax increases? Before you answer, realize that $255,000,000,000 would need to be cut from the yearly BUDGET to ensure no more is added to the debt. So, if the GOP were somehow able to cut $100,000,000,000 from the budget, which they have since stated will be more like $50,000,000,000, we will still be adding $155,000,000,000 every year to that debt. Shitty times are a coming, and I don't care what the GOP says, taxes are going up big time for the well off, much higher than the rates before Bush. All they are doing now is kicking the can down the road a couple years. I am fascinated that most people can't see this simple math. If I were to guess, they will mask it as tax reform, but whether the raise in revenue comes from an increase in the tax rate or a reduction in loopholes and deductions, pretty much everyone will be paying more, and soon. Passing the Bush tax cuts was done just to appease the GOP base and prevent a tax increase on people in the short-term (12 months or less).

no, i honestly don't believe we are ever going to pay off all our debt. I don't think its possible or necessary actually. we are a consumerist society and will always consume more than we create. What i want is a strong enough economy that tax revenue can cover a larger portion of the debt. when we are just taxing higher and higher to pay more and more debt it's an evil cycle that catches up with you. cut taxes, CUT SPENDING MORE (neither party can do that) let the economy recover so tax revenue goes up from strength of economy not from tax percentage being high.

 

[DOMS]

Political affiliation aside, does anyone here believe we are going to raise enough money to cover a $14,000,000,000,000 debt without significant tax increases? Before you answer, realize that $255,000,000,000 would need to be cut from the yearly BUDGET to ensure no more is added to the debt. So, if the GOP were somehow able to cut $100,000,000,000 from the budget, which they have since stated will be more like $50,000,000,000, we will still be adding $155,000,000,000 every year to that debt. Shitty times are a coming, and I don't care what the GOP says, taxes are going up big time for the well off, much higher than the rates before Bush. All they are doing now is kicking the can down the road a couple years. I am fascinated that most people can't see this simple math. If I were to guess, they will mask it as tax reform, but whether the raise in revenue comes from an increase in the tax rate or a reduction in loopholes and deductions, pretty much everyone will be paying more, and soon. Passing the Bush tax cuts was done just to appease the GOP base and prevent a tax increase on people in the short-term (12 months or less).

There are five things (at a minimum) that need to be done to control the budget.

1) Stop spending so much. End the war in Iraq now. Set an end date for Shittystan (any country that ends in "stan" is shitty by definition).

2) Severely curtail international aid. No more money to North Korea or into the drain that is Africa.

3) End the "If you don't use it you lose it" budget system the government uses now. That's where you have a department budge of say $10 million. If you only user $9 million, you lose $1 million from next years budget. This forces the department to always use all that it's given and it also never allows them to save any for unusual circumstances.

4) Restructure the welfare/support systems of the US, cutting out crap such as pet projects.

5) Close the borders. You can't have a self-sustaining system if there is a constant drain from outside the system.

 

[bio-chem]

There are five things (at a minimum) that need to be done to control the budget.

1) Stop spending so much. End the war in Iraq now. Set an end date for Shittystan (any country that ends in "stan" is shitty by definition).

2) Severely curtail international aid. No more money to North Korea or into the drain that is Africa.

3) End the "If you don't use it you lose it" budget system the government uses now. That's where you have a department budge of say $10 million. If you only user $9 million, you lose $1 million from next years budget. This forces the department to always use all that it's given and it also never allows them to save any for unusual circumstances.

4) Restructure the welfare/support systems of the US, cutting out crap such as pet projects.

5) Close the borders. You can't have a self-sustaining system if there is a constant drain from outside the system.

I agree with all 5. I doubt our governments ability to do anything as far as able to deal with it

 

[GearsMcGilf]

Taxes may have to be raised at some point. But, it's moot to do it without getting spending under control first. Taxes couldn't possibly be raised high enough to close the deficit at the current level of reckless spending. To raise them right now would be like coming home to a flooding kitchen and trying to bail the water out first, without looking for the source of the leak and first cutting off the flow.

 

[Big Smoothy]

There are five things (at a minimum) that need to be done to control the budget.

1) Stop spending so much. End the war in Iraq now. Set an end date for Shittystan (any country that ends in "stan" is shitty by definition).

2) Severely curtail international aid. No more money to North Korea or into the drain that is Africa.

3) End the "If you don't use it you lose it" budget system the government uses now. That's where you have a department budge of say $10 million. If you only user $9 million, you lose $1 million from next years budget. This forces the department to always use all that it's given and it also never allows them to save any for unusual circumstances.

4) Restructure the welfare/support systems of the US, cutting out crap such as pet projects.

5) Close the borders. You can't have a self-sustaining system if there is a constant drain from outside the system.

DOMS,

Good ideas. Common Sense.

But the gov has NEVER done this.

They will not be doing now, nor anytime soon.

These simple, common sense reasons that CANNOT and/or WILL NOT be done, are why the US is going down the drain.

 

[Dark Geared God]

ill be sure to look that over during my morning dump

page 2 is missing from the fax because i ran out of Tp on the crapper.. but in short it was 200 words of bush cheney blah blah...same old..so

 

[bio-chem]

page 2 is missing from the fax because i ran out of Tp on the crapper.. but in short it was 200 words of bush cheney blah blah...same old..so

sounds like something i need to wipe my ass with.

 

[Dark Geared God]

sounds like something i need to wipe my ass with.

agreed just did

 

[Big Smoothy]

Thanks for the responses to this thread, folks.

The point of the OP also is:

Cities across the USA are asking courts to allow them to file for bankruptcy. No city has been allowed to do so. as far as I know. If allowed to declare bankruptcy, they can renegotiate contracts with police and firefighters for example on pay and bennies and also not be legally bound to pay pension payments to retirees, or future retirees. And if one city is given the green light, others will be in line to follow.

Now, just think if a state became insolvent (which is possible) and was allowed to declare bankruptcy. (Illinios, New Jersey, California, and others for example.)

This is when the sh*t would hit the fan, IMO for millions of people.

 

[Dale Mabry]

There are five things (at a minimum) that need to be done to control the budget.

1) Stop spending so much. End the war in Iraq now. Set an end date for Shittystan (any country that ends in "stan" is shitty by definition).

2) Severely curtail international aid. No more money to North Korea or into the drain that is Africa.

3) End the "If you don't use it you lose it" budget system the government uses now. That's where you have a department budge of say $10 million. If you only user $9 million, you lose $1 million from next years budget. This forces the department to always use all that it's given and it also never allows them to save any for unusual circumstances.

4) Restructure the welfare/support systems of the US, cutting out crap such as pet projects.

5) Close the borders. You can't have a self-sustaining system if there is a constant drain from outside the system.

I agree with all of these, but doubt the government's ability to do any of them.

 

[DOMS]

I agree with all 5. I doubt our governments ability to do anything as far as able to deal with it

I agree with all of these, but doubt the government's ability to do any of them.

You're both correct. Each will be denied as follows:

1) Special interest groups will kill this one.

2) The bleeding hearts will call this inhumane and show pictures of little black kids, insisting that if we just give enough money to Africa it'll get better.

3) I honestly don't know why this would be denied. You'd think the people running the departments would want this. Maybe it's that the money spent at fiscal years end is spent on companies that finance politicians?

4) See #2, except that they'll use Mexican kids.

5) They'll say that closing the borders is racist. You know, what they're doing now.

 

[KelJu]

The debt can't be paid off. But look on the bright side, it doesn't really matter since our economy is based on fuck all. I'm thinking about running up as much debt as possible, and splitting the country with as many tangible goods as I can.

 

[ZECH]

You and your facts. Get that shit out of here!

Besides, you only hate him because he's black!

When did Newt turn black?

 

[irish_2003]

i want to understand this correctly......so if a state is awarded bankruptcy, then the businesses it owes money to will never see it and go bankrupt as well if they haven't already?......

i still say just give california back to mexico and build a super super huge border fence and national guard presence in full effect......soon cali will fall off into the ocean floor anyway, so it's not like we'd be losing much!!!