Archive for the 'Monetary Policy' Category



Bankruptcy for States? A Defining Moment for America

BY Glen Tschirgi
5 years, 10 months ago

There is quite a bit of buzz lately over the possibility of allowing States to file petitions under the U.S. Bankruptcy Code.   An article by Mary Williams Walsh in The New York Times yesterday, “Path Is Sought For States To Escape Debt Burdens,” lays out pretty well the gathering storm.

The article begins with reference to the,”crushing debts, including the pensions they have promised to retired public workers.”  This is, indeed, a real problem.   California, one of the worst offenders, is projected to have a budget deficit in 2011 of over $25 Billion.  New York and Illinois are in equally dire straits.

The article points out, ever so helpfully, that:

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.

Pardon me while I laugh out loud at this one.  Suddenly The New York Times cares about “high constitutional hurdles” and state sovereignty.  This is the paper that has published secrets about the federal efforts to track terrorists and cared nothing about the Constitution when it came to Obamacare.   Nor did the NYT seem to care about state sovereignty when it was Arizona’s sovereign right to enforce its borders.

The article goes on to report that several members of Congress and experts outside of Congress are debating the merits of a change to the Bankruptcy Code that would allow States to file for federal bankruptcy protection.

As a substantive matter, there are so many things wrong with the idea of allowing States to file a bankruptcy petition that several posts could be devoted to the subject (and perhaps someone will…).  Suffice it to say that: (A) any shred of States’ rights left in this country will be completely and finally buried if the federal government is allowed into State finances in anything like the way the usual debtor is governed under the Bankruptcy Code, and; (B) the moral hazard of allowing States, particularly the spendthrift ones like California, to wipe away debt will indelibly scar all State finances, and; (C) the ability of States to finance necessary capital projects will be severely restricted.   In short, this is Fall of the Roman Empire stuff, folks.

The Panic Sets In

What is more interesting is the underlying tone: panic.

Liberals who have adored the big welfare state are suddenly waking up to the fact that: (A) the gushers of money that always seemed to be there, no matter how high the tax rates were set, have suddenly stopped, and; (B) the voters are finally aware of the problem and actually demanding something other than the usual bailouts and tax increases.

If liberals cannot find new sources of other peoples’ money (0r undo the debts that they have run up), this fiscal crisis threatens to collapse much, if not all, of the liberal policies and programs of the last 75 years by revealing the socialist model as one, big Ponzi scheme that only lasted this long because of the incredible strength and resilience of the American economy.  No more.

So, as this panic sets in, liberals are doing what every spendthrift does when he is finally out of money: he asks his responsible family members for help.  Afterall, it worked last time with the massive, $800 Billion bailout in 2009 that was cynically touted as “stimulus.”   States were allowed to postpone the day of reckoning because Uncle Harry and Aunt Nancy were only too willing to give up the cash.  Amazingly, in just two years’ time, things have changed and Aunt Nancy has been cut off from the checking account.   Liberals know this time will be different.   Liberal bastions like California, New York and Illinois are not going to get a dime from the current Congress.

This is the impetus for Ms. Williams’ article.  Rather than face the utter repudiation and dismantling of their bloated, top-heavy, welfare states, Liberals are opting for wiping out the debts that politicians foolishly promised to their union supporters for decades.   Yes, unbelievably enough, Liberals are so desperate that they are ready to throw the public unions under the proverbial Bus.

The Usual Shock and Awe

Next, note that the call for bankruptcy protection for States comes in a vacuum, as if the enormous budget shortfalls arose magically overnight without warning.  (This seems to be the common, liberal posture:  abject, jaw-dropping, head-scratching surprise when confronted with the real-life consequences of liberal policy).

Should anyone be surprised when a never-ending policy of enlarging State government brings about “crushing” debt?  Was it somehow unforeseeable that adding tens of thousands of State employees each year with ever-increasing pay and benefits, would not, eventually bankrupt the State?  Yet this has been the liberal prescription since Franklin Roosevelt: ever greater involvement and control by Government which, by necessity, requires ever greater Government employment.

A Cancer We Can’t Ignore

Why are the politicians and political class talking about radical ideas like bankruptcy for the States?  To read the NYT article by Ms. Williams it would appear that States are helpless to control their budgets, as if some freak force of nature has descended.  (This, by the way, seems to be part of the same, recurring liberal tactic:  declare a crisis which compels radical solutions which the People are too stupid to understand).  Even if we assume that pension funding is a real and immediate problem, and we further assume that States cannot, as a unilateral budget matter, change pension obligations due to State constitutions, there is an obvious solution which no one seems to see.

It is called the Voter.

The State constitution can be amended to allow for necessary changes.  Go to the voting public and pass laws that will reduce budget obligations for benefits and salaries.  But, for some, strange reason, the politicians do not want to face the voting public.  Why is that?

Could it be that voters are finally starting to see that politicians are largely in the pocket of small but powerful interest groups with policies that run counter to public welfare at large?

So long as the general, voting public turned out in low numbers for state/local elections, public employee groups, while relatively small compared to the registered voting public, have commanded disproportionate power due to their greater focus and energy in mobilizing votes and donations.   They own the politicians and, hence, the political process.

This has led to a growing tyranny of sorts where the majority of Americans are increasingly subject to the whims of small but highly focused, highly energetic special interest groups that work through the political process to manipulate policies to their own, distinct advantage.

This cancer is self-perpetuating.  As the special interest groups, such as teacher unions, capture ever-better benefits vis a vis the private sector, increasing numbers of people are attracted to the group, swelling its numbers with more dues-paying, voting members.   This ever-growing cancer on the body politic will have fatal results for our republic if left unchecked.

California is a textbook example of this cancer of special interests transforming a one-time economic dynamo, blessed with every resource God can bestow, into a pitiful charity case.  This should unnerve every one of us, for if it can happen to California, it can certainly happen to the country as a whole.

And, by all appearances, it is.

If we are going to avoid a terrible fate, we will need political leaders at the State and Federal level that can confront and overcome the special interests.   Chris Christie in New Jersey may be the best example of this.  So far he has taken his message– and not a popular message at that of fiscal restraint– directly to the voters.   He has directly challenged the teachers union, among others, to help right the ship of State.   Note that this can only happen when the average voter gets so disgusted with the state of affairs that they are willing to vote in sufficient numbers to overwhelm the special interest groups.

Let us hope that there is a responsible majority in Congress that will not fall for the panicked calls to bail out failed social policies of Big Government.   And, in the meantime, it would be wise if ordinary Americans who believe in limited government get involved however they can in electing responsible leaders.


26th MEU (10)
Abu Muqawama (12)
ACOG (2)
ACOGs (1)
Afghan National Army (36)
Afghan National Police (17)
Afghanistan (677)
Afghanistan SOFA (4)
Agriculture in COIN (3)
AGW (1)
Air Force (31)
Air Power (9)
al Qaeda (83)
Ali al-Sistani (1)
America (7)
Ammunition (23)
Animals in War (4)
Ansar al Sunna (15)
Anthropology (3)
Antonin Scalia (1)
AR-15s (77)
Arghandab River Valley (1)
Arlington Cemetery (2)
Army (44)
Assassinations (2)
Assault Weapon Ban (26)
Australian Army (5)
Azerbaijan (4)
Backpacking (2)
Badr Organization (8)
Baitullah Mehsud (21)
Basra (17)
BATFE (51)
Battle of Bari Alai (2)
Battle of Wanat (17)
Battle Space Weight (3)
Bin Laden (7)
Blogroll (2)
Blogs (7)
Body Armor (17)
Books (2)
Border War (7)
Brady Campaign (1)
Britain (27)
British Army (35)
Camping (4)
Canada (2)
Castle Doctrine (1)
Caucasus (6)
CENTCOM (7)
Center For a New American Security (8)
Charity (3)
China (10)
Christmas (8)
CIA (12)
Civilian National Security Force (3)
Col. Gian Gentile (9)
Combat Outposts (3)
Combat Video (2)
Concerned Citizens (6)
Constabulary Actions (3)
Coolness Factor (2)
COP Keating (4)
Corruption in COIN (4)
Council on Foreign Relations (1)
Counterinsurgency (215)
DADT (2)
David Rohde (1)
Defense Contractors (2)
Department of Defense (126)
Department of Homeland Security (13)
Disaster Preparedness (2)
Distributed Operations (5)
Dogs (6)
Donald Trump (1)
Drone Campaign (3)
EFV (3)
Egypt (12)
El Salvador (1)
Embassy Security (1)
Enemy Spotters (1)
Expeditionary Warfare (17)
F-22 (2)
F-35 (1)
Fallujah (17)
Far East (3)
Fathers and Sons (1)
Favorite (1)
Fazlullah (3)
FBI (3)
Featured (176)
Federal Firearms Laws (17)
Financing the Taliban (2)
Firearms (510)
Football (1)
Force Projection (35)
Force Protection (4)
Force Transformation (1)
Foreign Policy (27)
Fukushima Reactor Accident (6)
Ganjgal (1)
Garmsir (1)
general (14)
General Amos (1)
General James Mattis (1)
General McChrystal (40)
General McKiernan (6)
General Rodriguez (3)
General Suleimani (7)
Georgia (19)
GITMO (2)
Google (1)
Gulbuddin Hekmatyar (1)
Gun Control (431)
Guns (1,009)
Guns In National Parks (3)
Haditha Roundup (10)
Haiti (2)
HAMAS (7)
Haqqani Network (9)
Hate Mail (7)
Hekmatyar (1)
Heroism (4)
Hezbollah (12)
High Capacity Magazines (11)
High Value Targets (9)
Homecoming (1)
Homeland Security (1)
Horses (1)
Humor (13)
ICOS (1)
IEDs (7)
Immigration (47)
India (10)
Infantry (3)
Information Warfare (2)
Infrastructure (2)
Intelligence (22)
Intelligence Bulletin (6)
Iran (169)
Iraq (378)
Iraq SOFA (23)
Islamic Facism (40)
Islamists (65)
Israel (18)
Jaish al Mahdi (21)
Jalalabad (1)
Japan (2)
Jihadists (80)
John Nagl (5)
Joint Intelligence Centers (1)
JRTN (1)
Kabul (1)
Kajaki Dam (1)
Kamdesh (9)
Kandahar (12)
Karachi (7)
Kashmir (2)
Khost Province (1)
Khyber (11)
Knife Blogging (2)
Korea (4)
Korengal Valley (3)
Kunar Province (20)
Kurdistan (3)
Language in COIN (5)
Language in Statecraft (1)
Language Interpreters (2)
Lashkar-e-Taiba (2)
Law Enforcement (3)
Lawfare (6)
Leadership (5)
Lebanon (6)
Leon Panetta (2)
Let Them Fight (2)
Libya (14)
Lines of Effort (3)
Littoral Combat (8)
Logistics (49)
Long Guns (1)
Lt. Col. Allen West (2)
Marine Corps (241)
Marines in Bakwa (1)
Marines in Helmand (67)
Marjah (4)
MEDEVAC (2)
Media (27)
Memorial Day (2)
Mexican Cartels (23)
Mexico (30)
Michael Yon (5)
Micromanaging the Military (7)
Middle East (1)
Military Blogging (26)
Military Contractors (3)
Military Equipment (24)
Militia (3)
Mitt Romney (3)
Monetary Policy (1)
Moqtada al Sadr (2)
Mosul (4)
Mountains (15)
MRAPs (1)
Mullah Baradar (1)
Mullah Fazlullah (1)
Mullah Omar (3)
Musa Qala (4)
Music (16)
Muslim Brotherhood (6)
Nation Building (2)
National Internet IDs (1)
National Rifle Association (17)
NATO (15)
Navy (21)
Navy Corpsman (1)
NCOs (3)
News (1)
NGOs (2)
Nicholas Schmidle (2)
Now Zad (19)
NSA (1)
NSA James L. Jones (6)
Nuclear (53)
Nuristan (8)
Obama Administration (217)
Offshore Balancing (1)
Operation Alljah (7)
Operation Khanjar (14)
Ossetia (7)
Pakistan (165)
Paktya Province (1)
Palestine (5)
Patriotism (6)
Patrolling (1)
Pech River Valley (11)
Personal (31)
Petraeus (14)
Pictures (1)
Piracy (13)
Pistol (2)
Pizzagate (11)
Police (226)
Police in COIN (3)
Policy (15)
Politics (261)
Poppy (2)
PPEs (1)
Prisons in Counterinsurgency (12)
Project Gunrunner (20)
PRTs (1)
Qatar (1)
Quadrennial Defense Review (2)
Quds Force (13)
Quetta Shura (1)
RAND (3)
Recommended Reading (14)
Refueling Tanker (1)
Religion (108)
Religion and Insurgency (19)
Reuters (1)
Rick Perry (4)
Rifles (1)
Roads (4)
Rolling Stone (1)
Ron Paul (1)
ROTC (1)
Rules of Engagement (74)
Rumsfeld (1)
Russia (28)
Sabbatical (1)
Sangin (1)
Saqlawiyah (1)
Satellite Patrols (2)
Saudi Arabia (4)
Scenes from Iraq (1)
Second Amendment (162)
Second Amendment Quick Hits (2)
Secretary Gates (9)
Sharia Law (3)
Shura Ittehad-ul-Mujahiden (1)
SIIC (2)
Sirajuddin Haqqani (1)
Small Wars (72)
Snipers (9)
Sniveling Lackeys (2)
Soft Power (4)
Somalia (8)
Sons of Afghanistan (1)
Sons of Iraq (2)
Special Forces (24)
Squad Rushes (1)
State Department (17)
Statistics (1)
Sunni Insurgency (10)
Support to Infantry Ratio (1)
Supreme Court (2)
Survival (12)
SWAT Raids (53)
Syria (38)
Tactical Drills (1)
Tactical Gear (1)
Taliban (167)
Taliban Massing of Forces (4)
Tarmiyah (1)
TBI (1)
Technology (16)
Tehrik-i-Taliban (78)
Terrain in Combat (1)
Terrorism (92)
Thanksgiving (6)
The Anbar Narrative (23)
The Art of War (5)
The Fallen (1)
The Long War (20)
The Surge (3)
The Wounded (13)
Thomas Barnett (1)
Transnational Insurgencies (5)
Tribes (5)
TSA (14)
TSA Ineptitude (11)
TTPs (1)
U.S. Border Patrol (5)
U.S. Border Security (13)
U.S. Sovereignty (15)
UAVs (2)
UBL (4)
Ukraine (3)
Uncategorized (42)
Universal Background Check (3)
Unrestricted Warfare (4)
USS Iwo Jima (2)
USS San Antonio (1)
Uzbekistan (1)
V-22 Osprey (4)
Veterans (2)
Vietnam (1)
War & Warfare (211)
War & Warfare (40)
War Movies (3)
War Reporting (18)
Wardak Province (1)
Warriors (6)
Waziristan (1)
Weapons and Tactics (57)
West Point (1)
Winter Operations (1)
Women in Combat (18)
WTF? (1)
Yemen (1)

December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006

about · archives · contact · register

Copyright © 2006-2016 Captain's Journal. All rights reserved.