Blog
TO BAIL OR NOT TO BAIL, THE UPCOMING QUESTION
January 27, 2011
Mixed in the debate among the many issues swirling around Washington is the question on federal bailouts for cash-strapped states. Following the practice of using taxpayer money to prop up failed banks, the auto industry and the notorious AIG, the ‘too big to fail’ approach is being thrown around to lend assistance to a handful of states that are careening towards a cliff they must find some way to navigate.
Living generously during prosperous times, committing to lavish pensions with menacing unions, and failing to plan when good times end, states now find themselves squeezed. The deficit numbers are quite stark: $25 billion for California, $15 billion for Illinois, and $10 billion for New Jersey. Financial analyst Meredith Whitney, celebrated for forecasting the collapse of the banks, now predicts that we’ll begin to feel the states’ pain in the spring when federal stimulus money dries up. As recently as 2009, California was forced to issue IOU’s in lieu of payment due to lack of funds, the State Treasurer Bill Lockyer is making headlines once again saying the Golden State may have to once again use promissory notes as early as April if new Governor Jerry Brown does not address the problem quickly. In Illinois, the state legislature just passed a 66 percent increase on income tax as a means to address their state financial shortfall.
The conspicuous question on the table is what to do? Is the federal government now to run to the aide of states who can’t keep their books balanced? Is California to live high-on-the-hog with all benefits of Golden State amenities while a Texas or Indiana covers their bill? The answer is a resounding ‘no.’ In difficult times you have to make difficult decisions, a family must find ways to reduce spending and live within their means when hard time fall upon them, a business must learn to adapt and cut expenditures when the economy slows, and so it must be the same for states.
Within each of these states’ governments, they must confront their own problem and find a solution unique to their own circumstances including cutting state programs. The above-mentioned New Jersey is garnering front-page news with Governor Chris Christie making sweeping decisions in confronting runaway union pensions, ending wasteful construction projects that incur massive costs, and actually laying out a business friendly environment to encourage companies to move to New Jersey rather than increase taxes on their earnings. Here in Texas, our legislature is meeting to find a solution to our own budget shortfall, estimated to be close to 15 billion.
The fatigue voters felt after the numerous bailouts and government acquisition of private entities has run itself deep in the minds of voters across the country; recent November elections and a new congress reflect this sentiment. If Washington were to attempt another bailout for states on the brink, the general response from voters would be swift and harsh claiming they’ve had enough already, let the states figure it out for themselves.
One of the great, and often understated, things about this nation is the freedoms we have across the board. Aside from the constitutional rights we all know and love, one liberty we have is the ability to move freely whenever and however we choose. If someone finds themselves living in a state that issues worthless IOU’s for payment and has to suffer through a massive tax increase so government can balance their books, he is free to get up and move and find a much better place to live, most likely to a state that controls spending and keeps taxes low.
Plain and simple, RON PAUL 2012 !!. I’m a little worried about what would happen if the Federal Reserve gets too closely scrutinized? If they open that curtain too wide we might see things we really don’t want to see this close at a time when the stimulus money is set to run out.. I trust Ron Paul, so I will bite the bullet and ride out the storm with him and the rest of The United States of America…RON PAUL 2012…
We keep hearing about, “how we should cut back and learn new ways to use our money.” I have as yet to hear the President, any Senator, Congressman, Governor or any others in office, say “I’ll take a cut in pay. I can live on less.” How much did the country pay George Washington? And what about the ex-Presidents, how much are they getting every year?
I don’t think we should cut them off without a cent, but shouldn’t they be doing this job not for the money but for the good of the country? I may be wrong.
NEVER!!! Hold the irresponsible states accountable.
If we do not, which I am not advocating one way or the other, does that mean we are headed down the path where states will soon build border fences?
No Federal Bailout for states…or banks or businesses. Add to that term limits for all elected officials – no pensions and participation in medicate. Let’s have a balanced budget and get our pride, solid dollar and strength back.
What idiot thinks that the irresponsible Feds should even consider borrowing money to bailout the irresponsible states? Where does this spending end? It is hard to believe that our elected officials have continued to allow this situation to get worse over the years, yet the give themselves pay raises, a special retirement and medical plan. If you understand this then you should also feel betrayed by the state and Federal government for incurring this debt.
OMG, when will this madness stop?
Rather than bailing out bankrupt states, the federal government should fine these states for bad fiscal management and give reward money to the prosperous states! The same system should apply to corporations and individuals. Incentives work much better when tied to success than to failure.
NO!!!!!! after raising 6 kids I can tell you that it seems the humane thing to do and in some circumstances it is. But when bailing your kids out only serves to enable the bad behavior or threatens the financial health of the parent , in this case both, you must let them suffer the adult consequences of their adult decisions. In this case it is hard to differentiate the adults from the kids as the federal government has been exuding the same behavior, so suffer the consequences now or later and with greater consequences. NO TO ANY AND ALL BAILOUTS!!!!
Each State should exercisse fiscal responsibility for their own programs and stop looking for Government “handouts”. Secondly, cease all foreign aid to nations that are not considered friendly. Let us stop being the world’s Police Force. Let the rest of the world take care of themselves, except in disasters. Charity begins at home and we have alot of people in need right here. All members of Congress and Senate should take a 20% paycut and be put on Social Security and Medicare programs like the rest of us, no special health plans or retirem,ent programs. They should p[ay into both like we do. All illegals should be deported at the expense of the country they came from, and their children born hers should not be recognized as American citizens, hence no benefits!!!
Let the states solve their own problems. If they have to cut those union pension plans and some of the other programs, so be it. And I’m with Sharon, let all those ex – retired presidents, senators and the like stop feeding on the tax dollars as well. They also should not be allowed to draw a check for live and get their medical dental paid for by us. Let them supply their own and get another job just like the rest of us have to do.
My mother said – you made your bed, now you have to lay in it. The residents of the states elected their Reps, Gov, etc. If their reps led them the wrong way – too bad. The Unions have a powerful hold over Calif. Nobody has been able to break the cycle. Too bad – so Sad. We can’t bail you out!!! If the Feds try, there will such a revolt, we might have a new revolution. There are consequences to bad actions, and the states that were irresponsible will have to pay the price – not those people and states that ran a responsible government.