Path for States to Go Bankrupt Discussed

[kiawahman]

My gut has been telling me for some time now, that the issue of state bankruptcy has been sporatically discussed behind the scenes well before 2008, and since then it became only a matter of when & how to sell it to the public.

It was easy to blame growing deficits on incompetence and re-election bids, ...too easy. The unwillingness of state government to reduce spending while knowing with nearly 100% certainty that when the Stimulus funds dried up there would be gaping holes in our budgets, kept whispering in my ear that something else was at play here, and that it most likely originated above the state level.

While the backlash potential of having millions of people suffering cuts or even elimination of their hard-earned contractual state pensions and benefits could get really ugly, one has to wonder about the mindset of those currently working for the state. When the idea sinks-in that government is now cannibalizing its own, how long can it exist?

[janetn]

Logic tells us their is an end game. The ponzi scheme cannot go on forever. Bankrupcy is probably the only reasonable answer. you cant tax your way out or grow your way out. What other alternative is their?

[Godwit]

Logic tells us their is an end game. The ponzi scheme cannot go on forever. Bankrupcy is probably the only reasonable answer. you cant tax your way out or grow your way out. What other alternative is their?

Cutting expenses and raising taxes will solve the fiscal problems of most if not all of the states. Ideally, this would be followed by electing legislatures that pay more attention to fiscal discipline. Also, by changing the rules that require a supermajority to do things, so that the party in power has the power to make changes and the voters know exactly who to blame.

[janetn]

Cutting expenses and raising taxes will solve the fiscal problems of most if not all of the states. Ideally, this would be followed by electing legislatures that pay more attention to fiscal discipline. Also, by changing the rules that require a supermajority to do things, so that the party in power has the power to make changes and the voters know exactly who to blame.

Michigan has a 1.8 billion shortfall out of an 8 billion dollar budget. so the new gove cuts the single business tax [which he should have ] now we have a 3.6 billion dollar shortfall. note this is approximatly half of the state budget. Taxes were already raised - the electorate wont tolerate another hike. How does a body of politicians cut almost half of a state budget. Cat herding would be easier.

Not even talking about all the money the state has borrowed over the years to pay for unemployment benefits. The state fund ran out years ago. We have more retired state workers collecting pensions than we currently have in state workers. The state is also losing population - less of a tax base to fund the liabilities. The state has cut the budget every year for the last few years. They are running out of hat tricks. If you were to do a state budget purely on logic or even common sense their is plenty of things that could be cut. But we are dealing with politicians who have to be relected and they are not likely to cut their own throats. Think teacher, police and firefighters unions.

[Godwit]

Michigan has a 1.8 billion shortfall out of an 8 billion dollar budget. so the new gove cuts the single business tax [which he should have ] now we have a 3.6 billion dollar shortfall. note this is approximatly half of the state budget. Taxes were already raised - the electorate wont tolerate another hike. How does a body of politicians cut almost half of a state budget. Cat herding would be easier.

Not even talking about all the money the state has borrowed over the years to pay for unemployment benefits. The state fund ran out years ago. We have more retired state workers collecting pensions than we currently have in state workers. The state is also losing population - less of a tax base to fund the liabilities. The state has cut the budget every year for the last few years. They are running out of hat tricks. If you were to do a state budget purely on logic or even common sense their is plenty of things that could be cut. But we are dealing with politicians who have to be relected and they are not likely to cut their own throats. Think teacher, police and firefighters unions.

I agree. Michigan is in worse shape both financially and structurally than Calif., NY, NJ and maybe even Illinois.

[janetn]

I agree. Michigan is in worse shape both financially and structurally than Calif., NY, NJ and maybe even Illinois.

Bankruptcy is the only way out IMO

[TEA Party Moma]

Bankruptcy will not solve the problem of 40% of the population paying NO taxes. It will also not solve the problem of the growing gravy train as more and more people hop on to get their Free Stuff. Yes it will solve the problem of crazy costs for union salleries and pensions, but we already elect people to solve those problems. All this will do is shift the responsibility and anger over to the courts. State bankruptcy is not constitutional. Changeing the rules in midstream makes us no better than Hugo Chaves. It is time that those who we elect to represent us, DO THEIR JOB! Renegotiate these contracts and strip the ability of unions to hold the public sector hostage by strikeing/slow downs by passing legislation prohibiting it. That would provide a level field for negotiation. Bankruptcy does none of these things. It did not fix GM and Chryslers root problems and it will not fix the problem here. It just arbitrarily changes the rules in midstream Depending who the judge is beholding to will affect who gets the shaft.

[Sleeping Cobra1]

We have seen the run down houses in Detroit and wonder, "This is Detroit/ USA"? It looks like a 3rd world city.

[jed turtle]

well, it is good that the herd if finally starting to sniff the air and smell smoke.

but they still don't understand.

it is far worse than most imagine.

once there is a loss of confidence in the US desire or ability to stand behind the US dollar,
we won't be discussing what entitlement to cut, or which tax to raise, because suddenly oil will no longer be priced in dollars but some other currency or gold or grain.

suddenly, the US will no longer be a viable place to work and live in.

suddenly.

[TEA Party Moma]

well, it is good that the herd if finally starting to sniff the air and smell smoke.

but they still don't understand.

it is far worse than most imagine.

once there is a loss of confidence in the US desire or ability to stand behind the US dollar,
we won't be discussing what entitlement to cut, or which tax to raise, because suddenly oil will no longer be priced in dollars but some other currency or gold or grain.

suddenly, the US will no longer be a viable place to work and live in.

suddenly.

You are correct. Unfortunatly when this happens we will not be left with anything, even our honor. It is all being frittered away by our governments local, state and federal. They have found out that the votes of many citizens can be bought by giving them "Freebees" paid for by others, including China. I wonder where the honor is in this country, today. There are few glimmers left.