Newt Gingrich Pushing Bill To Allow States To File Bankruptcy Allowing Them To Renege On Pension And Benefit Obligations

Tyler Durden's picture

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Vashta Nerada's picture

I'd really like to see this implemented.  The US can't borrow enough to cover the hundreds of trillions in unfunded pension obigations.

cocoablini's picture

Illinois' governor wants to raise the income tax 70% and no theres a recall effort.
Basically we have a huge game of chicken with pension giveaways and 80% lifetime benefits that the taxpayer doesn't get but the government intelligentsia and minions get.
So, obviously, Mother Nature is going to take care of this- by civil war or by flatout declaring bankruptcy.
The Soviet Union government class operated in the same way. Favored workers would get special shopping malls, Zils and fur coats. Government corruption and confiscation of wealth is a time old problem...until its not

Fish Gone Bad's picture

I am trying to see if there is any terrible news here, and there is.  Terribly good news that is!  Its about time someone looked up from the pig trough and realized the free meal was coming to an end.

TheGreatPonzi's picture

"Civil war"?

Considering the reactions to the Arizona shooting I've seen on this website, the probability of a war - or even violent riots - in America is less than 0.

95% of the posters were denouncing the very idea of firearms and violence, not the real problem, which was the actions of a schizophrenic madman.

Please, stop talking about civil war when yourself you would not be able to shoot on someone.

Gully Foyle's picture

TheGreatPonzi

"Considering the reactions to the Arizona shooting I've seen on this website, the possibility of a war - or even violent riots - in America is less than remote."

Yes indeedy.

But there is a great potential for riots when services get cut (check out my California post below).

But the real question is Balkanization. Will we see a breakup

http://online.wsj.com/article/SB123051100709638419.html

As if Things Weren't Bad Enough, Russian Professor Predicts End of U.S. In Moscow, Igor Panarin's Forecasts Are All the Rage; America 'Disintegrates' in 2010

(Oops wrong on the date, then again everything has been artificially propped up for the last few years. That does tend to jinx some forecasts)

Or Jesusland

http://www.buzzflash.com/contributors/04/11/images/04new_map.jpg

https://secure.wikimedia.org/wikipedia/en/wiki/Jesusland_map

The meme is in the form of a map of the U.S. and Canada which depicts a new hypothetical national border between the two countries. The "blue states" from the 2004 election, New England, the Mid Atlantic, the Pacific coast, Illinois, Michigan, Minnesota, and Wisconsin have been merged with Canada to form a single contiguous nation, which is labeled the "United States of Canada." The remaining "red states" are labeled as "Jesusland". The Freakonomics blog opined that the map reflected the "despair, division, and bitterness" of the 2004 election.[3]

Vashta Nerada's picture

If the map were redrawn, I'd bet that Alberta and Saskatchewan would join the US.

hewhohesit8s's picture

The birthplace of single payer health care join the for profit camp?  You have no idea how central our health care system is to the national identity.

57-71's picture

Not a fucking chance!
From Alberta with best wishes for the outcome of your major financial and social meltdown.

minus dog's picture

You're not making it out of this any better than we are, buddy.

57-71's picture

Exactly!
So we don't need to add any more problems to our own mess.
Spreading the grief does not console us.

tmosley's picture

Most here are intellectuals.  People like that don't need to pick up guns to win the fight.  You think Ben Franklin and Thomas Jefferson were out shooting Redcoats?

Terminus C's picture

Are you suggesting that "intellectuals" are smart enough to get other people to go and do their killing for them or are you suggesting "intellectuals are too cowardly to stand up for their beliefs?

DosZap's picture

 "You think Ben Franklin and Thomas Jefferson were out shooting Redcoats?"

 

Nah, Just dumb asses like George Washington.He was leading his troops and getting his ass shot at, and freezing it off at the same time.

Buckle up boyeeez, if this passes, as likely it will,the SWHTF.

Clandestinely, or on the streets.How do these people expect retirees to lose their likely only source of income, and keep quiet?.

Uhmmm, do we starve, and lose all we worked for, or do we sit on our asses, or do we start some shit.

I know what I would do.What if you wealthy intellectuals could take off your hats, and think how this plays out, if YOU were the one losing it all?.

My money says not likely.

goldfish1's picture

Had to go retrieve the old dog from wandering in the snow and getting too disabled to walk back. Went barefoot. Friggin cold. Made me think about the Washington and the men at Valley Forge. They were incredible.  Do we have those kind today in our midst, or the evolutionary version?

RockyRacoon's picture

Most here are intellectuals.

The people "here" don't matter all that much.  Wait til them good ole beer swillin', NASCAR watchin', deer and duck huntin', bass fishin' boys get a load of their retirement funds being zeroed out.

Ha!  Then we'll have some fireworks.

LFMayor's picture

Ponzi, I'd counter that your sample cross section is limited here.  Not a lot of meat eaters...

pemdas's picture

If we recall our governor, we would just have to pay him a pension.  Sigh.

Freddie's picture

Illinois is so broke it is not funny.  Gingrich is not a conservative but he is right here.  The fantasy of "bailouts" is a joke.

RKDS's picture

I love how we have plenty of new money to bail out banks and international corporations, but somehow it's such a burden to pay obligations we committed to long ago.  When these states decide to steal pensions from retired public sector workers, I hope they take every last cent of your 401Ks with them.

Sean7k's picture

Nah, we'll pull 'em out, pay the taxes and put them in assets that are off limits to the government. See, we do our due diligence.

Gully Foyle's picture

Let me repost this.

http://www.sacbee.com/2011/01/09/3310523/anatomy-of-browns-budget-plan.html

Anatomy of Brown's budget plan

The budget Jerry Brown will propose Monday includes deep program cuts, a June election to extend tax increases and a broad reordering of state and local government to close a deficit estimated at $25 billion to $28 billion, according to sources familiar with the plan. Here are some of the elements:

PROGRAM CUTS

Brown's proposed cuts would be felt throughout state government.

• Education: Provide K-12 schools with Proposition 98 minimum guaranteed funding. If June tax extensions fail, the guarantee would be suspended to allow deeper cuts.

• Higher education: Make deep cuts to both UC and CSU systems, in ways targeted to minimize fee hikes and enrollment reductions.

• State employees: Reduce spending in the six bargaining units that have not reached contract agreements, with savings similar to the 8 percent to 10 percent to which other units agreed.

• State organization: Consolidate some state departments and agencies.

• Governor's Office: Reduce budget by 25 percent ($7 million), including elimination of education secretary, Cabinet secretaries and first lady's staff.

• Parks: Shut state parks with lowest attendance.

• Libraries: Cut state funding for local libraries.

• Medi-Cal: Require patients to provide co-payments for services, limit doctor visits and reduce rates paid to health providers.

• Healthy Families: Increase participant premiums and co-pays, eliminate vision care.

• Welfare: Cut grants, impose stricter time limits on recipients getting grants, eliminate child care for 11- and 12-year-olds.

• SSI-SSP: Cut grants to the federal minimum for low-income elderly, blind and disabled individuals in the program.

• In-home care: Reduce the number of hours In-Home Supportive Services workers could care for elderly and disabled residents, cut domestic services like cleaning and laundry in cases in which caregivers live in the same home as recipients, typically family members.

• Developmental services: Make deep cuts to the system of 21 regional centers that oversee care for the developmentally disabled.

• Mental health: Use voter-approved Proposition 63 money to replace general fund money now spent on mental health.

• Children's programs: Ask voters to amend Proposition 10 to allow the state to use tobacco tax money now reserved for use by "First 5" commissions.

• Foster care: Eliminate transitional housing aid for 18- and 19-year-olds.

• Cal Fire: Reduce staffing on wildfires.

• Courts: Deep unallocated reduction to trial courts.

• Fairs: Cut all state funding for county fairs.

• AIDS: Require higher co-payments for AIDS drugs.

REVENUE

Brown will propose a variety of measures to increase revenue, in some cases directing the money to local governments.

Taxes: Ask voters in June to extend 2009 increases to sales, vehicle and income taxes, raising $8 billion to $10 billion over 18 months. If approved by voters, the revenue from extensions of the vehicle and sales taxes would flow to local governments to help finance government realignment.

• Dependents: Indefinitely extend the $99-per-dependent tax credit. The credit was lowered from $309 per dependent in 2008.

• Enterprise zones: Eliminate business tax relief in depressed areas that have been designated as enterprise zones, saving the general fund hundreds of millions of dollars.

• Redevelopment: Eliminate hundreds of local redevelopment agencies, eventually redirecting property tax revenue they receive to cities, counties and schools.

• Borrowing: Continue borrowing from special funds and take a portion of Indian gambling revenue to general fund.

• Corporations: Require all multistate businesses to calculate their tax liability solely on their sales in California. Businesses could no longer use an old formula that accounted for property and payroll size.

• Transportation: Use truck weight fees for debt service on state transportation bonds, circumventing Proposition 22's restrictions on taking local transportation dollars.

REALIGNMENT

Brown will propose several plans to shift programs to local governments.

• Juveniles: Eliminate the state Division of Juvenile Justice, instead sending money to local governments to house juvenile offenders.

• Adult prisoners: Low-level, nonviolent, non-sex offenders without serious prior convictions would be housed in county jails. Money would be sent to local governments to increase jail capacity and bolster rehabilitation programs.

• Mandates: Reduce the number of services local governments are required to provide and perhaps give them greater latitude to raise revenue to pay for them.

 

And this

http://globaleconomicanalysis.blogspot.com/2011/01/california-budget-bal...

California Budget Balancer Interactive Map from LA Times Misses the Mark

I just took the interactive LA Times California Budget Balancer exercise.

I vehemently protest.

This was a blatant effort to force people into accepting a need to raise taxes. To balance the budget I made every possible program cut offered. It was not enough. To balance the budget I had to raise sin taxes and gas taxes.

There are worse solutions of course, like hiking income taxes or corporate income taxes.

Exercise Misses the Mark

  • Where was a proposal to privatize the prison system using non-union labor?
  • Where was the proposal to eliminate prevailing wage laws?
  • Where was the proposal to eliminate defined benefit plans for all government workers?
  • Where was the proposal to virtually privatize every conceivable government job to the private sector?
  • What about programs that could be eliminated entirely?

California Agencies

Look at this disgusting list of California Agencies.

I sorted out some but not all of the more ridiculous ones.

Does the state need a ....

  • Acupuncture Department
  • Office of AIDs
  • Air Research Board
  • 3 different agencies for alcohol and beverages
  • 2 Apprenticeship Councils
  • Art Council
  • Asian Pacific Islander Legislative Caucus
  • Bureau of Automotive repair
  • Barbering board
  • Biodiversity council
  • Calvet Loan program
  • Climate Change Portal
  • Coastal Commission
  • Cool California
  • 4 Delta agencies
  • Digital Library
  • Bureau of Electronic and Appliance Repair
  • Employment Training Panel
  • Energy Commission
  • Equalization Board
  • 2 Fair Employment agencies
  • Film Commission
  • Flex Your Power
  • Healthy Family Program
  • Hearing Aid Dispensers Bureau
  • Home Furnishings Bureau
  • Humanities Council
  • Independent Living Council
  • Indoor Air Quality Program
  • Economic Development Bank
  • Interagency Ecological Program
  • Labor and Workforce Development
  • Latino Legislative Caucus
  • Learn California
  • Little Hoover Commission
  • Maritime Academy
  • Managed Risk Board
  • Museum for History
  • MyCali Youth Portal
  • Native Heritage Association
  • Natural Community Planning Program
  • Naturopathic Medicine Community
  • Outreach
  • Peace Officer Standards Board
  • Postsecondary Education Commission
  • Prison Industry Authority
  • Privacy Protection Office
  • Psychology Board
  • Railroad Museum
  • Recovery Task Force
  • Refugee Branch
  • Regents of the U of C
  • Save Our Water commission
  • Smart Growth Caucus
  • Status of Women Commission
  • Take Charge California
  • We Connect
  • Wetlands Information System
  • Workforce Investment Board

California does not need ANY of those. Moreover I assure you I missed dozens more that could be cut back if not eliminated entirely. What the heck do those cost? And how much can be saved by my suggestions above.

I propose the LA Times re-do their preposterous exercise meant to convey the idea that taxes have to be raised. They don't. In fact, I bet they could be lowered.

Here is the LA Times Discussion Thread on California Budget Balancer

For more ideas on how to Fight California Tax Hikes please visit the Howard Jarvis Taxpayers Association

Mike "Mish" Shedlock

 

And this

http://www.latimes.com/news/local/la-me-chowchilla-20110107,0,4007963.story

San Joaquin Valley's Chowchilla defaults on a bond

And finally this

http://www.huffingtonpost.com/2011/01/07/in-black-america-the-depression...

In Black America, The Depression Rolls On ...

A deeper dive past the headline numbers reveals a reality that ought to trigger national alarm but hasn't for the simple reason that it is already embedded in the country we have unfortunately become: the Divided States of America.

Among white people, the unemployment rate dropped in December to 8.5 percent -- hardly acceptable, but manageable were the government spending more to expand a fraying social safety net and generate jobs. For black Americans, the unemployment rate was 15.8 percent.

Professional economists will not pause for an instant at those figures. It is a truism that the black unemployment rate generally runs double the white one, and yet when did that become acceptable? How can there be so little discussion about a full-blown epidemic of joblessness in the African-American community, as if the commonplace incidence of despair -- and, more recently, reversed progress -- somehow amounts to old news?

"Can you imagine any other group at that level of unemployment and the media dismissing it as not important?" the Rev. Jesse Jackson asked during an interview this week.

He described deteriorating inner-city, predominantly-black communities in Chicago and Detroit. In New York, a recent study found that more than one-third of African-American men aged 16 to 24 were unemployed between early 2009 and the middle of last year.

"These are the same areas that were targeted for foreclosure by the banks, through reverse redlining," Jackson said, referring to the way subprime lending operations preyed with particular dispatch on minority communities. "These are the same areas that have less access to transportation, which makes it nearly impossible to get to where the jobs are. You are structurally locked out of economic participation and growth." blockquote .mid_article_ad_label { border: 1px solid rgb(221, 221, 221); }
Advertisement

The picture becomes more vivid still using a broader Labor Department measure known as underemployment, which counts jobless people along with those who are working part-time for lack of full-time work, or who have given up looking for work but are eager for jobs. Among African-Americans, the underemployment rate was running just under 25 percent late last year, according to an analysis of government data by the Economic Policy Institute in Washington. That compared to a rate of about 15 percent for white Americans.

( I know someone is going to bitch about linking instead of posting the whole fucking thing. So I saved you the trouble, now just comment on the fucking trends you see in the stories.)

walküre's picture

You know, in my book about 50% of the entire State of California bureaucrats are obsolete.

There is no need for ANY of the departments you list above and the cuts could go much deeper.

Do away with the Nanny state concept and push the people that depend on services into ice cold water. See who can stay afloat. The rest, well they can either move or drown. Simple.

Swim or sink.

Gully Foyle's picture

walküre

"Do away with the Nanny state concept and push the people that depend on services into ice cold water. See who can stay afloat. The rest, well they can either move or drown. Simple.

Swim or sink."

So your mentally ill or physically disabled niece or nephew should "sink or swim"? Your elderly parents or grandparents who slaved for a mere daily pittance and live by scrounging and food stamps should "sink or swim"? Cancer patients who would REALLY like to work but can't and are forced to rely on the state should "sink or swim"?

It breaks down like this, in an Economic crisis the poor, sick, and elderly are the first to suffer. These are people who did not CHOOSE how they live. They are victims of the times, victims of genetics, they tend to be victims in general.

Keep in mind that when it is your turn to suffer because of things you can't control will you choose to live without those benefits you decry now?

 

( Don't get me wrong there are a lot of areas that should be cut, but NONE of those will be to the disadvantage of WEALTHY POLITICALLY CONNECTED contributers)

malikai's picture

So your mentally ill or physically disabled niece or nephew should "sink or swim"? Your elderly parents or grandparents who slaved for a mere daily pittance and live by scrounging and food stamps should "sink or swim"? Cancer patients who would REALLY like to work but can't and are forced to rely on the state should "sink or swim"?

What, pray tell, are any of the agencies listed above doing for poor, sick, granny? Apart from handing her out a free hearing aid?

Rodent Freikorps's picture

I thought that was what families were for. Taking care of each other.

malikai's picture

In this modern day of the post-nuclear family, caring for anyone, parents or children, is obsolete. That's why we pay taxes right?

Correction: That's what the government is for, right?

Correction: They get foodstamps, so it is ok.

Correction: Instead of having a proper family and letting our children benefit from the knowledge and caring of their grandparents, let's just euthanize them instead, so we don't have to pay for their expenses.

Gully Foyle's picture

malikai

Obviously you misunderstood what I was responding to, which was the various specific idea of pushing those who need the services into a sink or swim situation.

 

dark pools of soros's picture

so boiled down you want slave wages (if any wages at all), but pampered retards and old fucks

basically you just want america to turn into another china and let china become the consumer

 

hey we can get rid of unemployment, just pay everyone a dollar an hour!!! wooot!!!

walküre's picture

Never a shortage of victims to be exploited by the bleeding hearts.

Birds in Arkansas were victims. Start a club for them as well.

Leave it alone and see what happens. World will still turn.

RockyRacoon's picture

Not a problem.  We like blackbird stew.  This makes harvesting easier.

PierreLegrand's picture

Victims? How are they victims? Who victimized them? Or did they make bad choices early on?

 

iDealMeat's picture

exactly..  But who cares??  Cut all you're own personal consumption by 50%.. All that lost tax revenue will increase the possibility of CH. 9 locally..

Insolvent states are going to get a Bernank bailout. perpetually..

 

JLee2027's picture

Insolvent states are going to get a Bernank bailout. perpetually..

Nah.  The taxpayers aren't going to put with this shit anymore.

DaveyJones's picture

do you really think the state can survive without a first lady staff?

StychoKiller's picture

Next thing ya know, dogs and cats start living together! :>D

DaveyJones's picture

as long as the dog is a boy and the cat is a girl otherwise, they can't have a joint license

DosZap's picture

GF,

Since the legislation is really not controlled by the legislature,but by Constitutional Amendments,(therefore must be changed by Amending it) how does Mr.Green Jeans propose to get around this?.

Ahnnnnold couldn't.

rlouis's picture

I was amazed to read Gov. Brown's budget recommendations - your observations below are spot on,  and although I don't agree with all of them, they have to be on the table.  The state has 1/2 trillion dollars in unfunded public employee pension liabilities and gov. Moonbeam wouldn't even consider the unrealistic costs of his main supporters, not even for the state's future?  It's pure BS - time for me to to re-read Orwell's Animal Farm, see who the pigs are. I'm also going to send a 'letter to the editor' of the local paper with your observations.  I don't agree with Gingrich about much, but with union pigs, BK is the only way to make some bacon.  

 

This was a blatant effort to force people into accepting a need to raise taxes. To balance the budget I made every possible program cut offered. It was not enough. To balance the budget I had to raise sin taxes and gas taxes.

There are worse solutions of course, like hiking income taxes or corporate income taxes.

Exercise Misses the Mark

· Where was a proposal to privatize the prison system using non-union labor?

· Where was the proposal to eliminate prevailing wage laws?

· Where was the proposal to eliminate defined benefit plans for all government workers?

· Where was the proposal to virtually privatize every conceivable government job to the private sector?

· What about programs that could be eliminated entirely?

 

TruthInSunshine's picture

Police Chief Raymond O'Hare, had barely clipped on his retirement watch when he accepted a job as the Jersey shore town's borough manager.  He’ll be collecting a pension of $121,000 while simultaneously taking home a salary of $120,000.

In some states, that's called double-dipping.  In New Jersey, it's par for the course. One former county official managed to string together eight part-time jobs to earn himself a $150,000 pension.

The tale of former Newark Mayor Sharpe James, who this year completed a 27-month prison sentence for federal corruption charges, strings together many of these themes.  According to the Newark Star-Ledger, he stockpiled a $124,000 annual pension from the city of Newark as well as a nearly $1 million 401(k) account during his prior career as a teacher at the aforementioned Essex County College.  Before he was convicted, he was also earning a $150,000 annual salary as head of an urban studies institute at the college and a $50,000 annual salary as a state senator.

The secret sauce behind bloated state pensions
DosZap's picture

I vote the RED states separate, and let the Blue ones fend for themselves.

After all, the VAST majority of corruption is,and always has been in them.

TruthInSunshine's picture

Police Chief Raymond O'Hare, had barely clipped on his retirement watch when he accepted a job as the Jersey shore town's borough manager.  He’ll be collecting a pension of $121,000 while simultaneously taking home a salary of $120,000.

In some states, that's called double-dipping.  In New Jersey, it's par for the course. One former county official managed to string together eight part-time jobs to earn himself a $150,000 pension.

The tale of former Newark Mayor Sharpe James, who this year completed a 27-month prison sentence for federal corruption charges, strings together many of these themes.  According to the Newark Star-Ledger, he stockpiled a $124,000 annual pension from the city of Newark as well as a nearly $1 million 401(k) account during his prior career as a teacher at the aforementioned Essex County College.  Before he was convicted, he was also earning a $150,000 annual salary as head of an urban studies institute at the college and a $50,000 annual salary as a state senator.

The secret sauce behind bloated state pensions

Plenty of public employees can retire under age 50
dark pools of soros's picture

why do you think the mob went away so easily??  they just took government jobs

Michael's picture

75% of working Americans are not eligible to receive a pension . Who cares about those 25% parasites. Scalp the bond holders.

RKDS's picture

If America could just harness its rich deposits of stupidity for export, why we'd be back on top yesterday.  There was an article a couple weeks back about Cuba laying off 500K government employees or 10% of the workforce.  Simple math extrapolates that 44% of Cubans work for the government.  In PA, with an equivalent number of citizens, the percentage is a whopping one half of one percent.  You wouldn't know it with all the howls of being overgoverned and opressed by millions of state employees that don't even exist though.

midtowng's picture

It has nothing to do with deficits. It's all about breaking unions and forcing wages in America down to China levels.

cranky-old-geezer's picture

It's not about unions.  It's about state / county / city governments promising more than they can deliver, and now they can't deliver. 

It doesn't matter if state / county / city pensions are law.  If the money isn't there to pay them they don't get paid, end of story. 

The legislature can create promises but it can't create the money to fulfill those promises. 

Bankruptcy dissolves all those promises, end of story.  Just like when a business declares bankruptcy.  Those promises simply vanish.

I don't believe states will go bankrupt though.  The Fed has set a clear trend of bailing out "systemically important" institutions, and I suspect state governments would be considered "systemically important".  I believe those pensions will be paid.

But they'll be paid in dollars worth far less.  That's the real story.  As the Fed floods the economy with endless amounts of money to keep every "systemically important" institution going, the dollar continues losing value.  State / county / city pensioners might survive a bit longer than people who get no pension. 

Eventually the dollar will be worthless and it won't matter how big your state / county / city pension is.  It will be paid in worthless dollars.

 

Panafrican Funktron Robot's picture

The Fed will by necessity buy the muni debt.  Bankruptcy doesn't happen if the finances are secure via additional debt issuance and/or purchase of existing debt.  The Fed has way, way too much incentive to keep the states afloat.  Reason:  the members o' the Fed have a lot of this garbage on their books and/or are currently servicing the debt as an intermediary. 

Bond haircuts.  I'll believe it when I see it.