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Poll Watch: Most Voters OPPOSE States Declaring Bankruptcy
This is a very bad idea.States are currently not allowed by law to file for bankruptcy, but former House Speaker Newt Gingrich and others have argued that bankruptcy might be the least painful alternative for taxpayers in heavily debt-ridden states like California, Illinois and New York. Voters aren’t thrilled with the idea, but they like it better than higher taxes, and they’re even more supportive if told government employees might have their pensions reduced in the process.
A new Rasmussen Reports national telephone survey shows that just 17% of Likely U.S. Voters believe states should be allowed to file for bankruptcy if they are unable to pay their financial obligations. Fifty-four percent (54%) oppose bankruptcy for states, and another 29% are undecided.
But voter support nearly doubles to 32% when the question is phrased to include the possibility that government employees might have their pensions reduced if their state filed for bankruptcy. Fifty-one percent (51%) are still opposed to allowing states to declare bankruptcy, but only 17% remain undecided.
Twenty-seven percent (27%) of voters are willing to pay significantly higher taxes to keep their state out of bankruptcy, but 44% are not and prefer bankruptcy instead. Twenty-nine percent (29%) are not sure which course they like better.
State governments are sovereign and must be held responsible for their own fiscal mismanagement. California can solve its own financial crisis without a federal bailout or bankruptcy. Governor Brown and the California Legislature must exert the political will to do so.
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Rep. Eric Cantor: No State Bailouts and No State Bankruptcy
House Speaker John Boehner of Ohio, right, looks on as House Majority Leader Eric Cantor of Va., speaks during a news conference on Capitol Hill in Washington, Thursday, Jan. 6, 2011
In other words, the state as soverign entities in the government will have to figure out their own fiscal solutions for budget shortfalls.House Majority Leader Eric Cantor (R-Va.) issued a new threat against a federal bailout for ailing state governments Monday as GOP leaders girded for a confrontation with President Obama over spending.
Heading into Tuesday’s State of the Union address, Cantor showed no desire for increases in virtually any area of the federal government, and he doubled down on his opposition to new proposed spending on infrastructure and education, even in areas, like transportation, where he acknowledged there were deficiencies.
Cantor flatly rejected any changes in the law that would allow state governments struggling with record budget deficits brought on by the economic recession and rising pension costs to restructure debt, including allowing them to declare bankruptcy.
“I don’t think that that is necessary, because state governments have at their disposal the requisite tools to address their fiscal ills,” the majority leader said, before going a step further.
“I think some … have mentioned this Chapter 9 equivalent for states is somehow going to stave off some kind of federal bailout — we don’t need that to stave off a federal bailout. There will be no bailout of the states,” Cantor said. “States can deal with this and have the ability to do so on their own.”
As it should be.
In California, the Democrat Legislature and Democrat Governor Jerry Brown have the ability to balance the budget without either asking Washington for a bailout or defaulting on its contractual obligations through a state bankruptcy law – which would need to be enacted by Congess and President Obama anyway.
They just need to have the political will.
What Rep. Eric Cantor, the House Majority Leader is saying is: Man up =“States can deal with this and have the ability to do so on their own.”
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Updated: Bankruptcy for the States – Just Say NO
California is always having a fiscal emergency because the Democrats who have controlled the California Legislature for decades spend and spend and spend. Bankruptcy for California is not the answer and I am amazed that it is being considered.Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers
Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.
But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.
Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.
You know, I believe in political accountability and the states are sovereign entities as spelled out in the U.S. Constitution. If California or Illinois have a massive insolvency problem, then the states MUST solve them.
I mean, didn’t they cause their own problems in the first place?
A few weeks ago, the Los Angeles Times posted an online state budget balance calculator for readers to attempt to balance the California budget. It took me about 3 minutes. In California, Jerry Brown, the new and former California Governor and the Democrat dominated legislature can do likewise – if they have the political will.
A California state bankruptcy would stiff retired older workers and state/city/county bond holders immediately and have other long term effects without delivering the needed political will or reforms – to say NO to excessive government spending. Bankruptcy would simply delay the enactment of appropriate budgetary solutions – like cutting spending and prioritizing government spending.
BK would simply reset the clock for the POLS.
Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.
All of a sudden, there’s a whole new risk factor, said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commissions Office of Municipal Securities during the Clinton administration.
For now, the fear of destabilizing the municipal bond market with the words state bankruptcy has proponents in Congress going about their work on tiptoe. No draft bill is in circulation yet, and no member of Congress has come forward as a sponsor, although Senator John Cornyn, a Texas Republican, asked the Federal Reserve chairman, Ben S. Bernanke, about the possiblity in a hearing this month.
State bankruptcy is a bad idea.
If Jerry Brown cannot balance the state budget, have him call me – I’ll do it for him in about 3 minutes.
As far as an oversight panel for California, as a California voter I reject that idea. If voters don’t like what their POLS are doing, then WE THE PEOPLE will take care of the problem. If insolvency occurs, then the POLS have to go and we will elect others.
No federal bureaucrat or federal judge should be disenfranchising me or other California voters.
Just say NO to State Bankruptcy.
Update:
And, what is Hugh Hewitt pushing here?Jerry Brown looks like he has begun the kabuki dance to the bankruptcy court by first ordering some cuts and then appealing to voters for a tax hike which will fail. (Very few people believe that a tax hike will pass. California is taxed out and any marginal burden will send high income residents and moire businesses fleeing.)
There is as yet no way for the states to file for reorganization, so Congress needs to hurry up. I will ask Congressman John Campbell of the House Financial Services Committee about this today, but there is no other way to proceed except for a reset. The Congress isn’t going to print money for the states to pay their union bills. It is that simple.
Damn Hugh, let Jerry Brown do his job and make the necessary cuts. If the tax increases pass, then that is California’s problem.
I don’t see how a state default or reset, as you call it, will help anyone – except postpone necessary budgetary reforms.
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Bankruptcy for the States – Just Say NO
California is always having a fiscal emergency because the Democrats who have controlled the California Legislature for decades spend and spend and spend. Bankruptcy for California is not the answer and I am amazed that it is being considered.Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers
Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.
But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.
Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.
You know, I believe in political accountability and the states are soveriegn entities as spelled out in the U.S. Constitution. If California or Illinois have a massive insolvency problem, then the states MUST solve them.
I mean, didn’t they cause their own problems in the first place?
A few weeks ago, the Los Angeles Times posted an online state budget balance calculator for readers to attempt to balance the California budget. It took me about 3 minutes. In California, Jerry Brown, the new and former California Governor and the Democrat dominated legislature can do likewise – if they have the political will.
A California state bankruptcy would stiff retired older workers and state/city/county bond holders immediately and have other long term effects without delivering the needed political will or reforms – to say NO to excessive government spending. Bankruptcy would simply delay the enactment of appropriate budgetary solutions – like cutting spending and prioritizing government spending.
BK would simply reset the clock for the POLS.
Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.
“All of a sudden, there’s a whole new risk factor,” said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commission’s Office of Municipal Securities during the Clinton administration.
For now, the fear of destabilizing the municipal bond market with the words “state bankruptcy” has proponents in Congress going about their work on tiptoe. No draft bill is in circulation yet, and no member of Congress has come forward as a sponsor, although Senator John Cornyn, a Texas Republican, asked the Federal Reserve chairman, Ben S. Bernanke, about the possiblity in a hearing this month.State bankruptcy is a bad idea.
If Jerry Brown cannot balance the state budget, have him call me – I’ll do it for him in about 3 minutes.
As far as an oversight panel for California, as a California voter I reject that idea. If voters don’t like what their POLS are doing, then WE THE PEOPLE will take care of the problem. If insolvency occurs, then the POLS have to go and we will elect others.
No federal bureaucrat or federal judge should be disenfranchising me or other California voters.
Just say NO to State Bankruptcy