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    Next big funding fight – Bailing out blue state pension problems

    Next big funding fight – Bailing out blue state pension problems

    Pelosi and Democrats repeatedly have tried to extort massive state bailouts necessitated by public sector union pension problems — it hasn’t worked so far, and if it’s up to Mitch McConnell, it never will.

    Nancy Pelosi, dragging Chuck Schumer along by his collar, caused enormous damage in delaying both the massive $2 trillion relief bill and then the follow up expansion of funding of the Paycheck Protection Program.

    Remember when the media lost its mind over closure of some national monuments during various Obama-era government shutdowns (which weren’t really shutdowns, more scalebacks)? Pelosi has caught none of that hell despite causing millions of workers and thousands of businesses real pain.

    In each case, Pelosi wasn’t just stalling for her pet pork projects and social justice agenda items like nationalized mail-in voting. She was trying to extort bailouts of blue states by holding virus relief funds hostage.

    In each case, Republicans gave on a few things, but not on any of the social justice issues and not on the blue state bailouts.

    The state bailouts are separate from helping states deal with the current crisis. There was $150 billion in the first large package for that, and in the future Republicans will consider additional targeting funding. That is, funding targeted at costs the states incur specifically as a result of the Wuhan coronavirus. That’s not very controversial.

    But that’s not what Pelosi and the Democrats really want. What they want is a massive several hundred billion dollar unrestritced bailout of states to help places like Illinois dig out of public sector union pension holes. For decades public sector unions have taken state and local governments to the cleaners because unlike private sector unions, there is not balance of bargaining power. The public sector unions contribute to the politicians to get their people in place in the legislature and state house, then ‘negotiate’ with the people beholden to them.

    In numerous blue states, including Rhode Island, even the occasional Republican or reformist Democrat Governor is powerless against this public sector union power in the legislature. States and cities are drowning in unfunded pension obligations.

    That’s the context in which Mitch McConnell said he would not oppose changing the bankruptcy laws to allow states to declare bankruptcy:

    Senate Majority Leader Mitch McConnell (R-Ky.) on Tuesday said that he supports letting states declare bankruptcy as they face mounting budget constraints sparked by the coronavirus and as Democrats pledge to seek more federal funding.

    McConnell, during an interview with radio host Hugh Hewitt, said any additional federal assistance to state and local governments needed to be “thoroughly evaluated.”

    “I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities. And there’s no good reason for it not to be available. My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that. That’s not something I’m going to be in favor of,” McConnell said….

    “You raised yourself the important issue of what states have done, many of them have done it to themselves with their pension programs. There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations,” McConnell said, after Hewitt floated Illinois, California and Connecticut as examples of states that have overly generous benefits for public employees.

    “We’ll certainly insist that anything we’d borrow to send down to the states is not spent on solving problems that they created for themselves over the years with their pension program,” McConnell added.

    You can read the full McConnell interview here.

    It’s not, as Democrats claim, that he wants states to go bankrupt, but the threat of bankruptcy would give states the leverage to renegotiate the abusive pensions systems. And if push came to shove, the pension systems could be reformed through the banktruptcy process.

    McConnell’s suggestion would allow states to reform their own houses, but it also would rip apart the Democrat incestuous relationship between public sector unions and state government. So McConnell’s suggestion is both fiscally reasonable, and politically savvy.

    This will be the fight. Pelosi may be crowing victory, but she got nuthin’ this time around.


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    jrcowboy49 | April 24, 2020 at 2:45 pm

    Most cities and states ran by idiot liberal democrats are fiscally irresponsible and in total financial peril or basically bankrupt. Cities can file Chapter 9 Bk to get their overpromised and compromised pension programs without the other state taxpayers assisting them. States that can’t get their fiscal house in order should not get a bailout as the USA has the same problem with enormous accumulated debt. Congress could create a new bankruptcy chapter for States that would allow them to reorganize with court oversight. Meanwhile President Trump will move the US closer to a balanced budget in his 2nd term because it is not an option.

    ConradCA | April 25, 2020 at 2:06 pm

    All government pensions should be funded annually. Every year their employees should accrue a fraction of their pension and an annuity which will provide that fraction of their pension should be purchased. This way when a person retires with a full pension they are guaranteed to receive what they have been promised. If the burden of pensions is to great then the government entity should renegotiate the pensions.

    ConradCA | April 25, 2020 at 2:17 pm

    The point of this is to make government pay for the pensions they promised to their employees. The current system makes others 30 years down the road pay which isn’t fair to the tax payers or the employees.

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