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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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rabid wombat | April 23, 2020 at 9:07 pm


    VenturaCapitalist in reply to rabid wombat. | April 23, 2020 at 10:56 pm

    HELL NO!

      notamemberofanyorganizedpolicital in reply to VenturaCapitalist. | April 24, 2020 at 7:01 am

      Brit Hume: “It’s Time to Consider the Possibility That the Coronvirus Lockdown Was a Collossal Public Policy Calamity”

      He distinguishes the “draconian lockdown” from more sensible social distancing rules, frequent hand-washing, etc.

      Video here.

      When asked about why so many people are so adamant the country remain locked down nigh-forever, Brit Hume says that if you “drill down” into who those people are, you’ll find they are almost all inveterate haters of Donald Trump. He sort of says, “Do the math in your own head.”

      I’m sure it’s all just a coincidence that the most Trump Deranged people are also the most fervidly pro-economic depression. It just worked out that way!

      Ace of Spades

    Conservative Beaner in reply to rabid wombat. | April 24, 2020 at 8:56 am

    Not only NO but F#c& NO.

Grrr8 American | April 23, 2020 at 9:18 pm

The Democrat / blue state pensioners, even if bailed-out, will find it a Pyrrhic victory — though it would be an enduring victory for the Democrat politicians. Any multi-trillion dollar bailout will be via dollars manufactured out of thin air. Which means Weimar-reminiscent levels of hyperinflation down the road.

So the pensioners will get every dollar they were promised, but only cents on the dollar levels of promised purchasing power.

Many (if not most) Democrat politicians realize this — but also realize that most of their base is economically ignorant (why else would they vote Democrat in the first place?) and so figure that they can get away with the sham “saving” / “rescuing” of public sector pensions.

the states made their bed now its time for them to sleep in it. the real life ant and the grasshopper story

    Massinsanity in reply to ronk. | April 24, 2020 at 10:23 am

    It should be noted that while mostly a blue state problem there are red states with horrific pension imbalances and the leading one is Mitch’s home state of Kentucky. The latest data I could find was from 2017 and it shows that KY is right there with IL when it comes to broken pension systems.

    Mostly red states in the best shape but 2 exceptions are NY and WA. On a city by city basis, while Chicago is the worst Dallas is in tough shape even though TX is in better shape overall.

This goes in hand with the fed tax plan under PDJT, where state citizens can’t deduct state taxes from their fed return.

notamemberofanyorganizedpolicital | April 23, 2020 at 9:32 pm

Tell the DEMS to go take a flying………

    notamemberofanyorganizedpolicital in reply to notamemberofanyorganizedpolicital. | April 23, 2020 at 9:47 pm


    Antibody Testing: Proves We’ve Been Had!

    Via Townhall:

    There is simply no other way to state this.

    Nearly everything we’ve been told about models, rates of infection, deaths, and recoveries was inaccurate.

    I’m not here to argue that it was malfeasance or ignorance — both are unacceptable. But the one thing that Governor Andrew Cuomo’s stunning announcement made clear on Thursday is that there are some pretty shocking — and what should be — reassuring truths…….

      As I’m sure you’re aware, antibody testing doesn’t provide evidence of infection, only exposure. I’m convinced that the CDC, NIH, Fauci, etal are using the same computer programmers that were employed by the IPCC to create their computer models on “climate change.”

        Paul in reply to Pete. | April 24, 2020 at 12:00 pm

        “As I’m sure you’re aware, antibody testing doesn’t provide evidence of infection, only exposure.”

        Exposing your immune system to a virus so that it can produce antibodies is, by definition, “infection.”

        I guess your meaning is that exposure/infection does not necessarily mean that a person will exhibit or experience symptoms such as fever, congestion, respiratory distress, etc.

        This is where this whole thing is going to be revealed as a massive f-up (or perhaps another Big Lie to take down Trump).

        As many have predicted, the roll-out of antibody testing is revealing that “the denominator” of the death-rate equation (the total number of people infected) is orders of magnitude higher than previously “modeled.” This means that the death rate is also orders of magnitude less than predicted.

        And yes, these are the same assholes pushing the “climate crisis” hoax.

    notamemberofanyorganizedpolicital in reply to notamemberofanyorganizedpolicital. | April 24, 2020 at 12:21 am

    Sic Sum Kat Flu on them.

    The Simpsons – The Full Monty

slightly off track, but did anyone see Nancy with the bandana as a face mask, didn’t that remind you the old stagecoach/train robbers of the old west, Nancy ‘the kid’ pelosi.

    notamemberofanyorganizedpolicital in reply to ronk. | April 23, 2020 at 9:46 pm

    Well, what do you expect? It is a hold up.

    danvillemom in reply to ronk. | April 23, 2020 at 11:06 pm

    I noticed that since she is back in DC she has been wearing scarves instead of her old lady jewelry. I believe it is envy of Dr Brix and the DeborahBrixScarves instagram account.

This is the number one reason we moved out of CA. In good years the Ds did nothing to pay down their pension liability…it is eye popping. If the Rs cave on this…uuuggghhh.

    The Friendly Grizzly in reply to danvillemom. | April 23, 2020 at 9:49 pm

    I’m willing to state with certainty that the Republicans will harrumph and bluster, then cave in.

    They always do.

      The first relief bill started at Trump’s requested $70 billion then ballooned to over $200B after McConnell took over to negotiate his “bipartisan” Senate bill which was then undermined by Pelosi. The final bill ended up at $2 TRILLION with McConnell claiming that Pelosi was denied her demands.

      Now here we are again. The latest bill started at $250B and ballooned up to nearly $500B. And we are supposed to believe that the Republicans further inflated the original bill with their own priorities before the Dems voted in support without gaining anything? What total BS!

      Apparently the kabuki is for Republicans to sponsor what Pelosi while publicly attacking her. Maybe her demands are being incorporated in the GOP details?

      Whatever it is, you can bet that McConnell if full of crap. Pelosi is winning big in all of this. We are being taken for a ride.

      When a certain Senator was still in office, the conservatives on staff used the phrase “Don’t count [on] your Hatch’s until he’s chickened.” That’s also McConnell and a bunch of other “fold like a cheap suit” Republicans to a “T”.

        I’ve been saying for weeks that McConnell and Pelosi cut a deal. This has all been kabuki ever since. Bipartisan negotiation followed by a drama queen event by Pelosi then a bill passes with no one reading it.

        On Wednesday, Andrew McCarthy was on Hannity explaining his memo to Pelosi where he protested passing bills without any process at all, even among the Democrats. Pelosi is now a party of one with enough proxy votes in her pocket to do whatever she wants without explaining herself to anybody (except McConnell apparently). So why have elections is those elected can just turn their vote over to Pelosi to do what she wants? In fact, why have a Congress at all? Where is McConnell on this?

It wasn’t a bandana it was a very expensive French ?

If they cave, they are done and there is no going back

Baby Elephant | April 23, 2020 at 9:46 pm

I think bankruptcy would be too appealing for some states. A state declaring bankruptcy should be put in Federal receivership and the President should be able to appoint replacements to all state wide elected officials subject to Senate approval. The state should stay in receivership until the financial situation has been resolved and the state should have no electoral votes until it is out of receivership.

    Massinsanity in reply to Baby Elephant. | April 24, 2020 at 10:36 am

    I don’t believe it is realistic for a state to declare bankruptcy. A more realistic plan is to force states to either raise taxes to support their profligate spending or default on their bonds. It will be brutal for the muni market but what is happening now is that states are getting around their balanced budget requirements by using cheap debt (another detrimental fall out of the Fed ZIRP program) to increase spending.

    Muni bond investors view the market as risk less as the expectation is a Federal or Fed based bailout any time a state or municipality gets in trouble.

    Let muni bond rates be set by the market and that will change behavior. When IL tries to raise debt and the market comes back with an ask at 15-20% it will be a wake up call for everyone.

I believe it is time to push the “Balanced Budget Amendment” again. While as someone living on disability, I am aware that I would most likely loose my pension I can’t see the nation becoming insolvent as an alternative. I hated having to accept that I could no longer hold employment and knowing that my existence is held hostage to the whim of politicans.
But if politicians were forced to have give up something to get something instead maybe they would learn what I and most other American retirees and disabled workers go through daily.

    Baby Elephant in reply to Shadow5. | April 24, 2020 at 1:03 pm

    Balanced Budget Amendments are useless. Just look at states like California who have a Balanced Budget Amendment. They employ dozens of accounting ticks that are illegal in the private sector to make budgets appear balanced when they actually aren’t.

It would really be nice if all those blue states’ chickens came home to roost, as Rev Wright said.

My second and last video of the day. The most important point Steve Deace makes in this video is ‘we are NOT a nation of law and never have been. We are a nation of political will and always will be.’ I don’t agree with Mr. Deace on every point in his commentary, but I find the overall idea of point 3 to be compelling. Watch point 2 at a minimum, 3 and 4 are good too.

the thing is, the pensions are just one part of the funding gap.

States which rely on sales and B&O tax are in for a HUGE shortfall next year. Pensions are just one line item of a long list of stuff that isn’t going to get funded.

This is why I think torpedoing the PPP would have been the best thing- it would force them to open the states up as the UI funds went bankrupt.

I’m betting Sweden stayed open because they can’t afford to close… and they are happy to clear those retirement homes of expensive pensioners anyway…cuz ya know….socialism.

    Baby Elephant in reply to Andy. | April 24, 2020 at 1:08 pm

    States with rainy day funds will do better than states who have to play cash flow games to pay bills. With the economy in the toilet raising taxes will not be an option and so states will have to finnally address their fiscal problems. That is good and healthy even if it is painful for the electerate.

    Sweeden stayed open because on an average day they only had 79 spare ICU beds in a country of 10 million people. No matter how much they flattened the curve they would not have been able to get it under the hospital capacity.

How about as an alternative to bankruptcy provisions being created for state governments the federal government takes over the administration of those States, similar, but hopefully more effective than what the federal government did with Puerto Rico?

Nah, the state’s wouldn’t be willing to have every financial decision submitted for approval to someone outside their power structure. So, bankruptcy is probably their best choice.

Politically it is a win win. The state’s can redirect spending from bloated pension promises that can’t be kept in good times towards the actual functions of government. The d politicians get to clean up the mess and blame r politicians from red states.

They shouldn’t fight too hard against the idea of bankruptcy, once offered and rejected then what will they have to give up to get it when bailout funding is off the table?

    Grrr8 American in reply to CommoChief. | April 24, 2020 at 8:34 am

    Too risky. Think, e.g., how close Florida came to electing Hotel Room Gillum as Governor. A Democrat Governor in a swing state could then engineer handing over the reins to D.C. — and imagine D.C. with a Democrat Congress changing that state’s election procedures and making it a sanctuary state, amongst other things.

a very long time ago Gerald Ford wouldn’t bail out NYC hopefully Chuck remembers that day and NYC survived.

VenturaCapitalist | April 23, 2020 at 10:53 pm

The BK canard is just silly. The pensions would not – cannot be discharged. The union cockroaches got them written into the state constitutions. And the city BKs as prototype… also silly. The pension funds always got their money. And in Detroit they even sold off the are treasures and handed the money over to the union goons.

johnny dollar | April 23, 2020 at 11:33 pm

If the Dems take over the Senate, as well as retaining control of the House, I guarantee that a state bailout will be sent to the then president for signature.
I doubt Trump would sign it; Biden (or his conservator, given his tenuous mental state) would sign it in a second.
This election will be crucial. Again.

It is fundamentally unfair to expect states which have behaved responsibly to subsidize, through the federal budget, those spendthrift states such as Cal. (my state, I am sorry to say) who are profligate spenders.

This problem is not limited to Blue States.
It is limited to States with Public Labor Unions and Politicians.
The Politicians sell out the taxpayers, and the Union provides the votes..

if the feds were to make every state pension plan solvent, it wouldn’t solve anything, the only way to change anything is to change behavior, what is it left likes to say about Pres Trump, he was to kick the can down the road, that’s what they want to do

I’ve been thinking of wearing a bandana and a cowboy hat into the grocery story. I mean, when was the last time you could do that without them thinking “robbery”, 1890?

    Vancomycin in reply to stl. | April 24, 2020 at 7:30 am

    “I’ve been thinking of wearing a bandana and a cowboy hat into the grocery story.”

    Ha. I got some fabric so my wife could make me some bandanas. I told her I was gonna go rob a train.

Others have said it, NO!

Back in the early 80s when interest rates were soaring the state of Oregon was confronted with state employees demanding pay raises. The legislature came up with a brilliant response. They said instead of a pay raise how about we guarantee your pension fund would always be funded at 8% growth. A few years back they discovered it was not a good idea so they voted to rescind the contract to stop the hemorrhaging The Oregon Supreme Court ruled a contract is a contract. No go. So most retirees are receiving a pension that is larger than when they worked. A former football coach receives an annual pension of over $400,000.

Why should those of us who have to fund our own retirements be forced to fund public retirement plans? It’s time for governments all levels to implement retirement plans similar to those used in the private sector.

As a NJ resident for most of my 60 years, I can affirm that the State has been heading for fiscal ruin since the mid-1990’s.
CoVid is the crisis-that-brings-opportunity in the profligate minds of NJ politicians.

I have been saying for 8+ years that a PR-style “bankruptcy” (since there’s nothing in the US Code that allows States to go Chapter 9) would be an opportunity for a “re-set” on the pension and bond debt that NJ owes.

Of course, the PW-unions and the big-bank bondholders aren’t so eager, but given the abundance of Delaware bridges, taxes on wealth-creators can only be raised so high.

Ever person in Congress that votes to “bail out” the decades of bad financial decisions made by their “friends” in blue states should be required to forfeit their own wholly taxpayer-funded retirements for life as the first step. Show us how much you truly support this idea and put your own skin in the game. All these bailouts would do is transfer the responsibity away from those who made the decisions (and the idiots that voted for them) to those that had nothing to do with it. Actions… Meet consequences. In the military, we had a very simple concept that worked every time… the 5 P’s: Proper Planning Prevents Pisspoor Performance.

inspectorudy | April 24, 2020 at 9:32 am

I think Mitch is on to the only possible solution to the bankrupt state. If they are bailed out by other states then the terrible union contracts and overpaid workers will remain after the bailout and the same issues will be waiting to reappear. Bankruptcy allows the entity to go to court and seek remedies for the reason for the bankruptcy. Absent that chance to renegotiate the contracts, why declare bankruptcy? Rewarding bad fiscal behavior with a bailout would only make other states join the gravy train.

Illinois (a shit hole where I unfortunately live) is the most desperate of those moochers–corruption is rampant at all levels of government, property taxes are out of sight, my local sales tax is 9.75% and if you eat out it’s even higher;state employees have pension and medical benefits that almost no one in the private sector anywhere in the country receives and that. does not include the large number of ghost employees who show up only for their pay checks;
and our Democratic governor Tubby Pritzer made his fortune through the arduous effort of
being born. The state has billions of dollars of unpaid
current bills; its credit rating is crap; and those who can are leaving in hordes.

    notamemberofanyorganizedpolicital in reply to JAB. | April 24, 2020 at 1:03 pm

    Sad to inform you, that corruption through all levels of government is rampant in all 50 states.

    Sales tax is almost 9% where I live in the middle of nowhere.

    Studies have shoan that states that construct toll roads promising the tolls will pay off for the construction in say 20 years, but still are charging tolls even 70 years after the construction, have massive corruption with those tolis going to corrupt politicians. Likewise if you streets and highways are torn up for months with them being in just as bad condition afterwards…..well… massive corruption with kickbacks and bribes.

No to bailouts.
NO to bankruptcy, too.

States are sovereign; sovereignty means you don’t go bankrupt, you default. Let the folks who’ve invested in States’ debts recognize that it was a bad deal, and take the haircut that the rest of us ‘little guys’ do. Sometimes investments go bad, and this looks to be one of the times.

The States still have the option of cutting back their pension programs to put them in accordance with the funding that they have. Then they won’t need to be bailed out.

    notamemberofanyorganizedpolicital in reply to ss396. | April 24, 2020 at 12:55 pm

    The states have zero viable options except to cut all of their programs.

    They can save the most, billions and billions, by Outsourcing all education from kindergarten through doctoral-level, and Outsourcing all Policing functions.

“No to bailouts.”

It started with LTCM in 1998. Many warned that is was a slippery slope and now we have become bailout nation.

How soon will there be a proposal for Washington to give money to the states to make up for lost sales taxes?

I can think of no better example of two sides talking past each other, employing visions and concepts that don’t make contact with the other, than the state public service union pension/budget issue. There might be no clearer instance of two incompatible, irreconcilable, and wholly different views of the world insofar as one side, the Democrats’, evidently in this instance have no substantive relationship with — certainly, therefore, no vital interest in the notion and practice of — financial or political accountability.

They institutionalized the incestuous “elect me, we’ll negotiate later” anti-social treachery with the PSUs on the back of the taxpayers they have long pretended to lead and govern (read: in actuality, deceive and manipulate, plunder and disserve), and then pathologically assert the chutzpah to foot the bill to the taxpayers all over again in the scam of getting themselves off the accountability/political hook.

The Dems, we must deduce, view any such professional, legislative responsibility to do otherwise as retired and irrelevant. Their self-evident lack of any need to exercise restraint and decency, ie, ethical conduct in the service of good government just comports perfectly with their commitment to avoid any obstacle in their essential agenda to hold on to power.

Of course, they know the press won’t bother them and that’s how they so easily continue to sin against society. Hopefully, the Republicans will, and not enable this vicious slime-formation to endure.

No wonder the Dems are comfortable with — indeed, they promote — the sight and tragic existence of — the destitute-homeless, surely the abandoned mentally ill, shooting up virus-contaminated poison, infecting and rendering contagious their bodies and souls, while defecating on their own cities’ streets. In the end, you see, members of this party have, ironically, no shame. Nor any sense of deserved guilt.

Isn’t this a classic description of an institutional sociopathy?

McConnell is right. Let them pay for their shameful crime. They indeed earned the right to be punished, if not disgraced, in paving their own road to political perdition. Our civil society, or what’s left of it, has simply had enough of their parasitic filth.

The “inflate your way out of debt” brings us to the path of the Weimar Republic. All it takes is for China to fashion a replacement global reserve currency for the dollar and conquest is complete. The Dems see life as a cabaret, while our enemies believe “tomorrow belongs to me.”

I wonder how many agreements have a COLA which would defeat a bailout?

How about these states that want additional federal funding prepare an itemized listing of what they have spent and what tax income they have received since say March 1st through April 30. That’s the delta. Now adjust for the infusion of federal dollars already approved to be sent to the state’s for hospitals and testing plus the not earmarked $150 Billion the state’s are already getting.

If the state’s can show a loss for the period then maybe we can at least think about it. However, that conversation would include some very unpleasant reality being delivered. Cost cutting in education spending for instance. Take N.Y. spends overwhelmingly the most per pupil with results near the bottom. Why, cost of living. Why is NYC cost of living so high? Policy choices such as rent control and limits on new residential housing.

So for NYC to ask for more, they would need to be willing to overturn those policies. Why, well overturning those restrictions on housing means more affordable housing, which means lower cost of living which means reduction in education budget which means those dollars can be spent on other purposes.

Until these ‘progressive’ states are willing to change their profligate spending ways, as would every other borrower, then they can bear the budgetary burden that they created. To want free money from the federal taxpayers to support their spendthrift lifestyle choices is a bridge too far.

NO bailouts period. Let the states go back to the pensioners they LIED to for years and admit (as they said in Animal House), “You fu*#ed up, you trusted us”. The next election would prve very interesting in these oases of liberal largess.

    CommoChief in reply to MAJack. | April 24, 2020 at 4:49 pm


    I agree with you. The point of my post above is to demonstrate
    1. They are not out of money based on those parameters
    2. Their fiscal issues are of their own making not corona
    3. They will have to open up the books and cut to the bone prior to seeking funds from federal taxpayers in other states

    These states are not willing to admit this nor make any changes. They simply want free funds. Not going to happen.

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.

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.

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.