Is this the ultimate RESET - will states be allowed to declare bankruptcy?

[ExGingi]

https://www.bloomberg.com/news/articles/2020-04-22/mcconnell-says-he-favors-allowing-states-to-declare-bankruptcy

WOW. This would be unprecedented and unexpected, and possibly the ultimate reset that taxpayers need. Under-funded public pensions are a huge problem that no-one knew how to solve.

[CountValentine]

What would happen to state pension obligations?

[ExGingi]

What would happen to state pension obligations?

Well, NOTHING short of bankruptcy can change those. Bankruptcy is about undoing all contractual obligations and coming up with a workable settlement. If courts and states will stand up to the public unions, then there's a chance that those pensions get adjusted in a fair way (meaning that the beneficiaries give up something too, not throwing it all on the taxpayers). IL can definitely make use of bankruptcy, though I wouldn't trust the politicians to do it in a responsible manner.

[CountValentine]

Well, NOTHING short of bankruptcy can change those. Bankruptcy is about undoing all contractual obligations and coming up with a workable settlement. If courts and states will stand up to the public unions, then there's a chance that those pensions get adjusted in a fair way (meaning that the beneficiaries give up something too, not throwing it all on the taxpayers). IL can definitely make use of bankruptcy, though I wouldn't trust the politicians to do it in a responsible manner.

So basically stick it the workers while we give trillions to bail out businesses. The feds need to bailout the states just like they are bailing out everyone else.

[Jellybelly]

So basically stick it the workers while we give trillions to bail out businesses. The feds need to bailout the states just like they are bailing out everyone else.

Or they can take somewhat of a loss just lake everyone else. Pensions would probably also end up getting something, just not fully funded. There’s some expression I’ve heard here on DDF about pigs getting fat...

[aygart]

So basically stick it the workers while we give trillions to bail out businesses. The feds need to bailout the states just like they are bailing out everyone else.

Spoken like a true pensioner.
And who will bail out the Feds?

[aygart]

Well, NOTHING short of bankruptcy can change those. Bankruptcy is about undoing all contractual obligations and coming up with a workable settlement. If courts and states will stand up to the public unions, then there's a chance that those pensions get adjusted in a fair way (meaning that the beneficiaries give up something too, not throwing it all on the taxpayers). IL can definitely make use of bankruptcy, though I wouldn't trust the politicians to do it in a responsible manner.

With courts involved there is a chance. It will not be all up to the politicians. The bankrupt party doesn't get to decide which contracts get modified and which don't.

[ExGingi]

So basically stick it the workers while we give trillions to bail out businesses. The feds need to bailout the states just like they are bailing out everyone else.

The Auto unions were bailed out by Obama at taxpayers' expense.

Are you saying that the workers should be made whole at everyone's expense?

With big businesses that employ thousands and are a major part of the economy, there's an argument to be made to save them from going under (in exchange for concessions).

Bankruptcy would not only "stick it to the workers" it would also "stick it to Municipal Bond holders" and possibly many others. Pensions would probably get the smallest hit.

[CountValentine]

The backup for the states is the feds. When the states can't handle the covid-19 crisis it is the feds job to bail them out. Tornado/hurricane/flood the same thing. This is no different.

For McConnell to take this position is 100% political.

[justmeha]

The backup for the states is the feds. When the states can't handle the covid-19 crisis it is the feds job to bail them out. Tornado/hurricane/flood the same thing. This is no different.

For McConnell to take this position is 100% political.

And who will bail out the Feds?

[aygart]

The backup for the states is the feds. When the states can't handle the covid-19 crisis it is the feds job to bail them out. Tornado/hurricane/flood the same thing. This is no different.

For McConnell to take this position is 100% political.

There is no industry which got a blanket bailout. The weaker ones who began with poor finances will go bankrupt despite any bailout. What will be with the states which had poor fiscal management? Why should their poor fiscal management become the responsibility of the remaining states?

[CountValentine]

I can only see questions/comments from those on ignore when you quote them. 
Who is bailing the feds out now? You have an issue with the trillions given away so far?

[aygart]

I can only see questions/comments from those on ignore when you quote them. 
Who is bailing the feds out now? You have an issue with the trillions given away so far?

That is your choice when you want to avoid difficult questions. I apologize if I said anything insulting. I never intend to insult anyone.

At the end of the day, unless you subscribe to MMT that is something which needs to be answered. Another is whether or not there should be accountability for states which made unrealistic promises for the votes of public unions.

[yesitsme]

what with all the teachers that siting in the PBS doing nothing

[aygart]

https://www.thelakewoodscoop.com/news/2020/04/federal-rescue-of-state-pensions-should-require-state-reforms-says-thomson.html

[CountValentine]

WOW. This would be unprecedented and unexpected, and possibly the ultimate reset that taxpayers need.

Maybe McConnel should give back all the money his state has received from the feds. His state is being bailed out every year. 

[CountValentine]

This idea is getting destroyed on so many different levels as it should!!!
https://www.msn.com/en-us/news/politics/marie-antoinette-of-the-senate-rep-king-blasts-mcconnells-push-to-bankrupt-ny-nj-as-shameful-indefensible/ar-BB135jMr?ocid=spartanntp

[CountValentine]

Coumo keeps hammering McConnell over this. He now dares him to pass a law allowing states to declare bankruptcy. He called him out as the 3rd largest taker of federal funds. I have never seen such a beatdown as this before. This is McConnell's deplorable moment. I can see them trying to pin this on all R's!!!

[Dan]

That is your choice when you want to avoid difficult questions. I apologize if I said anything insulting. I never intend to insult anyone.

At the end of the day, unless you subscribe to MMT that is something which needs to be answered. Another is whether or not there should be accountability for states which made unrealistic promises for the votes of public unions.

Quoted for Reb Chaim 

[whYME]

What would happen to state pension obligations?

What happens to private sector pension obligations in a bankruptcy?