Republicans Want Cash-Strapped States To Declare Bankruptcy?

Speaking of the “Land of Lincoln,” I came across a piece in the Wall Street Journal yesterday in which Illinois Treasurer Dan Rutherford talked about the option of bankruptcy protection for cash-strapped states like Illinois. Michael Corkery wrote:

Illinois Treasurer Dan Rutherford has a solution to fiscal problems facing state and local governments.

“Someone has to go out and have the testosterone and deal with the problems, particularly with the public employee unions,” the state’s Republican treasurer said in a forum this week at Cardozo Law School of Yeshiva University in New York.

Testosterone, said Mr. Rutherford, is better than the alternative: allowing states to seek bankruptcy protection so a judge can sort out fiscal problem such as pensions.

According to Rutherford, Republicans in Congress are pushing the idea of bankruptcy protection for states. From the article:

While saying that, “I happen to be treasurer of one of the most bankrupt states in all of America,” Mr. Rutherford said he was breaking with congressional Republicans who have supported the state bankruptcy idea.

“I think what is driving this boat … that we have some Republican juice in D.C. and they don’t want to have … to bail this whole thing out.”

ABC News’ Mary K. Bruce reported back on February 27 that state governors are not big fans of the idea. She wrote in The Note blog:

Governors today slammed talk of federal action to allow states to declare bankruptcy and said the idea would ultimately do more harm than good.

“Suggestions have been brought forward and some speculation that states are teetering on the brink of bankruptcy. I’m here to say I believe that’s a dangerous development,” Utah Gov. Gary Herbert said at a panel on the state of public finance at the National Governors Association winter meeting. “It has risks to our municipal markets, to those who invest in our states wondering about the economic viability of our states. This is coming from incomplete and in many times inaccurate information.”

Herbert, who chairs the NGA’s Economic Development and Commerce Committee, went on to say that Congressional talk about a state bankruptcy option “brings uncertainty to the marketplace and causes a potential increase in interest rates. It rattles investors and will raise the cost of state government and create more volatility in the financial markets.”

Congress has held several hearings on the possibility of allowing states to declare bankruptcy, which, proponents argue, would help cash-strapped states get back on track by relieving them of debt. Influential Republicans, including Newt Gingrich and Jeb Bush, have suggested bankruptcy would give states the option to reorganize their finances and free themselves from union obligations.

“In such a reorganization, a state could propose to terminate some, all or none of its government employee union contracts and establish new compensation rates, work rules, etc,” Bush and Gingrich wrote in a Los Angeles Times op-ed last month. “The lucrative pay and benefits packages that government employee unions have received from obliging politicians over the years are perhaps the most significant hurdles for many states trying to restore fiscal health.”

Governors at the NGA conference today strongly disagreed.

Stay tuned.

Sources:

Corkery, Michael. “Ill. Treasurer: ‘Testosterone’ Needed to Solve States’ Fiscal Woes.” Wall Street Journal. 24 Mar. 2011. (http://online.wsj.com/article/SB10001424052748703784004576220474201416538.html). 25 Mar. 2011.

Bruce, Mary K. “Governors Reject State Bankruptcy Option.” ABC News (The Note blog). 27 Feb. 2011. (http://blogs.abcnews.com/thenote/2011/02/governors-reject-state-bankruptcy-option.html). 25 Mar. 2011.

Tags: , , , , , , , ,

No comments yet.

Leave a comment



Survival And Prosperity
Christopher E. Hill, Editor
Est. 2010, Chicagoland, USA

Successor to Boom2Bust.com
"The Most Hated Blog On Wall Street" (Memorial Day 2007-2010)

Please Rate this Blog HERE

Limited Time Offers

Via Banner Ads Below (navigate to vendor home page if necessary); Updated 8/31/15:
ANY CHARACTER HERE
>CHIEF Buy 2 Pants Get 1 Free Thru 8/31 11:59PM ET (code needed)
ANY CHARACTER HERE
>BUDK 30% Off Sale ($29 min. order; code needed)
ANY CHARACTER HERE
>Pyramyd Air Get 20% Cash Back On All Purchases 8/15/15-8/31/15 If It Rains 9/12/15; Overstock Sale
ANY CHARACTER HERE
>Nitro-Pak Labor Dale Sale Save Up To 40% Off
ANY CHARACTER HERE
>Food Insurance Bonus Bucks Are Back!; Save Up To 43% On Freeze-Dried Seasoned Ground Turkey Pieces
ANY CHARACTER HERE
>Airsoft Megastore Free Shipping On All Orders (no code required)
ANY CHARACTER HERE
>BulletSafe Bulletproof Baseball Cap $119 Pre-Order Price; Ballistic Plate Only $169
ANY CHARACTER HERE
>Tractor Supply Co. Free UPS Ship To Store
NEW! Advertising Disclosure HERE
ANY CHARACTER HERE
Buy Gold And Silver Coins BGASC Review Coming Soon
ANY CHARACTER HERE
Free UPS ship to store on all Tractor Supply Company orders! Shop now! Tractor Supply Co. Review Coming Soon
ANY CHARACTER HERE
Nitro-Pak--The Emergency Preparedness Leader Nitro-Pak Reviewed HERE
ANY CHARACTER HERE
MyPatriotSupply.com Reviewed HERE
ANY CHARACTER HERE
Food Insurance Reviewed HERE
BullionVault BullionVault.com Reviewed HERE
ANY CHARACTER HERE
CHIEF Supply Reviewed HERE
ANY CHARACTER HERE
BulletSafe Reviewed HERE
ANY CHARACTER HERE
BUDK bowie knife BUDK Reviewed HERE
ANY CHARACTER HERE
Pyramyd Air is your one-stop shop for everything airgun related. PyramydAir.com Reviewed HERE
ANY CHARACTER HERE
Airsoft Megastore Reviewed HERE
ANY CHARACTER HERE
Survival Titles Save 20% Paladin Press Reviewed HERE
 

Categories

Archives

Prepper Website
  • Observation, Theory About Greek Bank Safe Deposit Box Restrictions

    Continuing “Greek Week” on Offshore Safe Deposit Boxes, Greek state television has announced Greek banks will remain closed for the remainder of this week. Both Reuters and the Associated Press have reported cash withdrawals from Greek bank safe deposit boxes have been prohibited. Reuters ran its story Sunday while the Associated Press revealed Monday: No […] ...
  • Safe Deposit Boxes In Private Vaults See ‘Huge Increase In Demand’ By Wealthy Greeks

    While pouring over the latest news of Greece’s sovereign debt crisis tonight, I spotted the following snippet on the Daily Mail (UK) website. Nick Fagge reported Wednesday: Safety-box deposit firms have reported a huge increase in demand with wealthy Greeks storing their cash and other valuables anywhere other than their bank… (Editor’s note: Bold added […] ...
  • Confusion Over Accessing Cash In Greek Bank Safe Deposit Boxes

    Yesterday, I blogged about a Reuters piece from Sunday which said cash withdrawals from Greek bank safe deposit boxes were now prohibited. Monday, the Associated Press reported that accessing currency from these containers might be left to the legislative process. From the Fox News website: There was confusion Sunday night over the fate of bank […] ...
  • Cash Withdrawals From Greek Bank Safe Deposit Boxes Forbidden

    Something tells me confidence in bank safe deposit boxes is going to plummet as word of the following gets out. Reuters’ Lefteris Papadimas and George Georgiopoulos reported Sunday: Greeks cannot withdraw cash left in safe deposit boxes at Greek banks as long as capital restrictions remain in place, a deputy finance minister told Greek television […] ...
  • Happy Independence Day!

    Just wanted to wish readers of Offshore Safe Deposit Boxes a happy Independence Day. Christopher E. Hill Editor ...