Plans being drawn up to let states go bankrupt

[spanone]

Pensioners and investors in state bonds could lose out.

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.

http://www.msnbc.msn.com/id/41188877/ns/business-the_new_york_times/

[Odin2005]

1. Here it comes, folks. Disaster Capitalism.

[spanone]

2. sell those bonds....

[mmonk]

3. [phone]

[RufusTFirefly]

11. [phone] and 1!

Exactly. You nailed it.

[SpiralHawk]

22. "Shock & Awe, Baby. Sneer." - RepubliCorp

[madrchsod]

4. but the federal government will have to fund their social security...

that`s one massive amount of money that the federal government has to fund....

[MannyGoldstein]

5. Part of the war on senior Americans

They're after the pensions:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x238503

[shraby]

6. What about the states that have "balanced budget amendments"

in their constitutions that were passed by the citizens? Not only that, but whatever the House passes still has to be passed by the Senate and signed by the President.

[Hello_Kitty]

27. All but (I think) 3 states have them.

It's not the balanced budget requirements that are causing the problem, though I don't think they're a great idea in general, it's decades of ill-advised tax cuts.

[Atypical Liberal]

7. I think when an entity goes bankrupt...

I think when an entity goes bankrupt the pension plans should get first dibs at all monies.

Shareholders signed up for RISK.

Employees did NOT. They made an agreement - to work for a certain compensation, both while employed and during retirement.

Shareholders should get paid LAST. That's part of the risk of investing.

[Xenotime]

8. This will just make the rich richer

[closeupready]

10. Yes. In a nutshell.

n/t

[kentuck]

9. Yes. Let out all the prisoners and fire all the policemen...

It's every man, woman, and child for themselves. The conservative wet dream.

[mike_c]

12. a crisis is a terrible thing to waste....

Rat bastards.

[Octafish]

13. Trust requires Integrity.

Where have we fallen?

[Proud Liberal Dem]

14. Creepy idea IMHO

How can the federal government bail out states, particularly when we have Republicans openly talking about refusing to raise the debt ceiling and causing a crisis at the federal level?

[Major Hogwash]

15. I guess North Dakota will be spared.

They didn't spend much money to build anything there.

[sarcasmo]

16. The super wealthy trying to get that pension money. Who is behind this war on pensions?

The amount of elderly this would put out on the street, what a sad society we live in.

[WinkyDink]

18. World oligarchs and their craven minions, is who.

[badtoworse]

19. Nobody is going to make out if this happens

It's more likely the wealthy would get hosed because people with high incomes typically buy state and municipal bonds. The interest is tax free, an important consideration to someone with a high income. If a state defaults on its bonds, the bondholders (which include the wealthy) will be left holding the bag. A lot of other people would get screwed too, but I don't see how this would help anyone.

How would anyone "get" the pension money?

[NYC Liberal]

24. "You know what they want?

They want obedient workers. People who are just smart enough to run the machines and do the paperwork but just dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it. And, now, they're coming for your Social Security.

And, now, they're coming for your Social Security. They want your fucking retirement money. They want it back, so they can give it to their criminal friends on Wall Street. And you know something? They'll get it. They'll get it all, sooner or later, because they own this fucking place. It's a big club, and you ain't in it. You and I are not in the big club.

This country is finished."

-George Carlin

[Poboy]

29. Yes sir.

[WinkyDink]

17. If PA "modifies" the pensions of retired teachers---those of us who REFUSED the offer of a one-time

pay-out transferred to a private bank (one of several possible pension options, along with varying degrees of percentages now for longevity of payment later, including to survivors)---THERE WILL BE HELL TO PAY LIKE HAS NEVER BEFORE BEEN SEEN.

My husband is receiving a MUCH lower pension now (and since 2001) in order to have money for ME should I survive him. Would he get a REFUND under this scheme? I THINK NOT.

THIEVES. LIARS. MOBSTERS.

Does anyone really think anything---the economy, jobs, safety, education, housing, infrastructure, health-care---is going to IMPROVE when we are bombarded incessantly with tales of how BROKE we are *cough*exceptfortheM-IC*cough*?? NOTHING is going to get better.

God bless the child.......

[sarcasmo]

20. My wife and I do the same thing. She worked 28 years for the city of Grand Rapids.

Paid into the pension all that time and now Greedy fucks are coming for what she paid into. Guess maybe we take the 65,000 dollar early buyout, but then what?

[WinkyDink]

21. Exactly. The pay-out gets you nothing in interest today.

[Javaman]

23. But but but.. I thought the economy was getting better?

anyone else getting tired of the polishing of the turd?

[Octafish]

25. More tax cuts.

It's not raining. It's trickle.

[Javaman]

26. the glory of tax cuts...

spending ourselves towards the cliff while stepping on the tax cut gas peddle.

:rofl:

[DCBob]

30. It is getting better but not nearly fast or broad enough..

to solve many states huge debt problems.

[RufusTFirefly]

28. George Carlin warned us...

They don’t want people who are smart enough to sit around a kitchen table and think about how badly they’re getting fucked by a system that threw them overboard 30 fuckin' years ago. They don’t want that. You know what they want? They want obedient workers . . . Obedient workers, people who are just smart enough to run the machines and do the paperwork. And just dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and vanishing pension that disappears the minute you go to collect it, and now they’re coming for your Social Security money.

They want your fuckin' retirement money. They want it back so they can give it to their criminal friends on Wall Street, and you know something? They’ll get it . . . they’ll get it all from you sooner or later cause they own this fuckin' place. It’s a big club and you ain't in it. You and I are not in the big club.

Video here: http://www.youtube.com/watch?v=acLW1vFO-2Q

(Oops! Noticed belatedly that NYC Liberal already beat me to it! Worth repeating though!)