DeMint: There will be no bailout for states

[Skippy 82]

Here’s the question I put to Sen. Jim DeMint during a brief telephone interview last night:

Chances are pretty good that Illinois, California, and New Jersey, and maybe a dozen or more other states, are going to go broke — because they cannot meet their pension expenses. All told, the states are about $3 trillion short, and they’re going to come looking to Congress for a bailout. Are you going to write that check, or are you going to let them hang and watch the municipal-bond market collapse? Which angry mob do you want to face?

Senator DeMint did not exactly say, “We’re going to let the municipal-bond market collapse,” but it sure sounded a lot like that.

http://www.nationalreview.com/exchequer/257603/demint-there-will-be-no-bailout-states

Should be interesting to see what happens.

[pheonix561 2080]

uh,

this is probably not going to end well.

[Ammonsa 308]

Forgive my ignorance, but is this a state caused problem or is this the federal government doing something and then not providing the states with the ability to afford it?

[Skippy 82]

This is a state's problem. There are several states that have spent their way into the hole and now are having trouble maintaining their current expenses and paying their debt. A commonly blamed part of this is that many of these states give guaranteed lifetime pensions with early retirement options to all government workers, and many have issues with unions controlling public services such as road crews, so on.

Bankruptcy would mean not paying those pensions, huge cuts in government at all levels in the state, pay cuts and hiring freezes for government jobs.

[pheonix561 2080]

What will happen if states like Illinois go bankrupt?

[Skippy 82]

What will happen if states like Illinois go bankrupt?

You will see huge fallout in union run businesses, as government benefits will be cut. You would likely see a cut in police/fire and other public services. The legislature would have to be totally reformed and a lot of humanitarian aid would have to be cut.

No one can say for certain because the Federal Government is still trying to figure out exactly how to do state bankruptcy, as it's never happened before, to my knowledge.

Expect taxes to go up.

[Aethix 129]

This is no word for this apart from "sad". The problem was caused by spending money, the solution most people have come up with (correct me if my wild guessing is inaccurate) is spending money, and the people who caused the problem in the first place probably aren't going to pay a penny out of pocket.

[Ammonsa 308]

So basically the politicians were overreaching and now the taxpayers have to suffer?

[Skippy 82]

So basically the politicians were overreaching and now the taxpayers have to suffer?

Yep, politicians spent the states to death, and the taxpayers will now have to pick up the tab in those states. I imagine there may be a mass exodus of overburdened taxpayers leaving these states if the shit hits the fan.