Tag Archives: California

The Problem with State Bankruptcy

I certainly like the idea of allowing states like California to declare some form of Bankruptcy.  As Jeb Bush & Newt Gingrich recently noted in a piece, Better off Bankrupt:

[A] new bankruptcy law would allow states in default or in danger of default to reorganize their finances free from their union contractual 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. The new law could also allow states an opportunity to reform their bloated, broken and underfunded pension systems for current and future workers. 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.

I certainly am a big fan of dealing with the bloated union contracts and state employee pensions that have ballooned to create an unsustainable state budget.  Don’t think we haven’t created a monster?  Check out this stat:

The figures for next year’s budgets are staggering. California, which faces a $25.4-billion budget shortfall, will pay $100,000+ pensions to more than 12,000 state and municipal retirees this year. A Stanford study puts the state’s unfunded pension obligations at more than half a trillion dollars.

While some form of Bankruptcy makes sense when looking at these numbers, my concern is 2 fold.  First, that states will look at the new Bankruptcy as a crutch to never really change their spending ways.  Bush & Gingrich adrress that:

An additional benefit of a new voluntary bankruptcy law for states is that its mere existence may deter any state from ever availing itself of its provisions. If government employee union bosses know that they could have all their contracts annulled under federal bankruptcy law, either through a plan of reorganization voluntarily entered into by state leaders or by the voters through proposition, they may be far more accommodating with state governments to restructure government employee union workforces, pensions and work rules.

That makes sense, but it is still a concern I have.

 

My second concern is how suck a bankruptcy would effect the state’s bond rating & the overall ability to borrow money.  Again, Bush & Gingrich have a response:

Third, the new law should allow for the restructuring of a state’s debt and other contractual obligations. In a voluntary bankruptcy scenario, states, like municipalities, will have every incentive to file a reorganization plan that protects state bondholder claims and their ultimate recovery. States will evaluate their future access to bond markets and their prospective borrowing rates as they formulate the optimal restructuring plan.

When California refused to bail out Orange County, the county entered bankruptcy and emerged within 18 months. Within three years, the county returned to an investment grade rating, and it repaid 100% of the principal of the vast majority of its investors by 2000 without raising taxes.

The lesson is that voluntary bankruptcy offers taxpayers the option to restructure state finances responsibly to achieve long-term fiscal health — which can only improve California’s bond rating since it is the worst in the nation— instead of simply having to accept the Sacramento solution of another tax increase.

Overall I think the Bankruptcy option may work, but it is something that must be carefully addressed.

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These People Pay Their Taxes & Contribute to Society

Unemployed, 5 DUI arrests, 4 anchor babies, 21 years here illegally….Yes the illegal immigrants from Mexico are hard working contributors to our society!! LAUGHABLE!

Read about Miguel Sotelo.

LAUGHABLE!

GOP Senate Primary in CA…None Impress

So I listened to the three candidates for the GOP nomination here in California to bring down the nitwit lack of “intellectual firepower” Barbara Boxer.  To be honest, I still am not sure who I like.  Fiorina’s answers sounded like she was just arguing against Boxer, which I like on one level because too often Republicans destroy each other in primaries here in California and we end up with a weakened candidate to take on the Dems.

The downside I saw with DeVore is that his answers, in general, tended to be along the lines of “I’m conservative, I stand for liberty.”  What I really have in mind was their discussions of the TARP Bill, Fiorina & Campbell gave responses that showed me they are intelligent and have a grasp of complicated economic issues, DeVore’s answer did not.  I’m tired of having Republican candidates who just appear to be firebrands like Tom Delay or sound bite experts like Palin & Bush.  (As a side note Palin did endorse Fiorina.)

Campbell is playing off his “moderate” credentials, which I get, but not sure if he has the personality to get it  done against Boxer.  I understand the people who say: “don’t vote for someone just because they have a better chance to win.” But at the same time, wouldn’t ANY of the 3 GOP candidates be better than Botox Boxer?

 

California & Gay Marriage

So the California Supreme Court has ruled on Prop 8.  I’m not really surprised at the outcome.  It was a bit of a stretch for the opponents of Prop 8 to claim that it wasn’t an effective amendment to the constitution because it altered it to such a degree that it changed it too dramatically.  If the opponents of Prop 8 are really upset, what they should do is protest the moron mayor of SF.  Prop 8 would have failed if Gavin Newsome hadn’t made is “whether you like it or not speech.”

The whole Prop 8 issue is very interesting.  I watched the film Milk over the weekend.  The movie was ok, but it was very enlightening.  The most interesting part of it was the defeat of Prop 6 in 1978, which was also known as the Briggs Initiative.  The Briggs Initiative was a California proposition which sought to fire any teacher who was found to be “advocating, imposing, encouraging or promoting” homosexual activity.   The interesting part that relates to Prop 8 is this, the opponents of Prop 6 mounted a campaign for homosexuals to come out of the closet to their friends, family & co-workers.  The theory being, if people know someone who is gay, they would be more likely to vote down Prop 6.  Prop 6 lost 58% to 41% despite all the pools before the election showing it winning.   Now look at Prop 8 which lost 52.24% to 47.76%, despite the polls showing it going the other way throughout most of the campaign.  The difference I think was the arrogant, loud mouth Newsome spouting off.

I think the yes on 8 people could have just played that over & over, it was very effective for one reason, it pissed people off!  To me that is the biggest reason why Prop 8 failed.

California Props

It was nice this week to see the tax & spend propositions here in California go down in flames.   Now maybe the Govenator and his Dem chronies will once and for all have to enact some meaningful budget reform in California.  This state has been a mess for years, with a number of causes. 

One of the big probelems is how we silly voters in California always used to fall for the propositions that set aside a percentage of the budget for schools.  While a noble goal, there’s a big problem, when revenues are good, all the money gets spent, BUT when times get tought, the union thugs scream because they don’t get all the money the got in the drunken sailor spending days.   Another problem is that we spend over $10 million a year on services for illegal immigrants, well there’s half the budget problem right there.   Then there’s the unions who basically control the state.  Because the weenie Republicans in this state agreed a number of years ago to a redistricting plan that let them have there safe seats, seats in the Assembly and Senate rarely change parties, so the Dems are left with a permanent majority (as a side note this should change with a ballot measure that we passed last November on redistricting).  The Democrats have one goal, pleaseing the union bosses, if the union bosses are unhappy with you Mr. Democrat, they’ll back someone to beat you in the primary.

Hopefully Californians have had enough of the games Sacramento plays, Tuesday was a good start.