Posted by JM Ashby
"No way is the federal government going to bail out our state," declares Representative Joe Walsh, a Teabagger from Illinois. Too bad for him, because Illinois received $1.2 billion dollars in stimulus funds to save jobs from being lost. It's also too bad for him, because those stimulus funds are about to dry up and what's underneath the cloak of all that dirty socialized money is going to be revealed.
Newly elected state lawmakers facing massive budget shortfalls due to low revenue are currently trying to decide how they're going to patch the holes. What is the cause of low revenue? Tax cuts for people don't need them, a reduced tax-base due to unemployment, and tax loopholes. As previously reported, tax receipts are at their lowest level since 1950.
When given a choice between raising taxes on the wealthy, asking the federal government for help, and cutting public programs and attempting to declare bankruptcy to kill pension funds, most of them are opting for the later. Declaring bankruptcy is not currently an option for states, but some folks seek to change that.
Legislation that would allow U.S. states to file for bankruptcy will likely be introduced in Congress within the next month, Newt Gingrich, the former speaker of the House of Representatives and a powerful Republican Party figure, told Reuters in January.
States currently cannot declare bankruptcy because the U.S. Constitution recognizes them as sovereign entities. But changing the law to allow them to declare bankruptcy would free them to renege on promises made to employees for pensions.
Public pension funds' investments were hit hard by the financial crisis and employers pulled back on contributions to the funds as their revenues collapsed and they grasped for spending cuts.
So when faced with tough decisions, the first inclination of Republicans is to go after people who are the most vulnerable. Wow, they're really tough on spending! Macho!
Maybe we should stop handing out tax cuts for corporations and the wealthy instead? Or better yet, why don't we increase spending to give people jobs so they can actually pay taxes? Nah, that would just be un-American socialism.
This is another one of those cases where public employees are treated as some sort of abstract idea or person who doesn't actually exist. What will happen if those employees lose their pensions or their jobs? The tax-base will shrink even further and states will face higher unemployment rolls, causing budget shortfalls to become larger. Do any Republican lawmakers have a mathematics comprehension level above that of an 8th grader? Personally I feel like this is the product of the deification of the Reagan administration and it's economic policies.
Doesn't privatizing Social Security sound like a grand idea right about now? Yeah, didn't think so.