Topic of the Week: bankruptcy for states?

As I was surfing the intertubes last night, I came upon this article noting there’s a movement afoot to change existing laws to allow states in financial dire straights to declare bankruptcy.

What do you think….should states be allowed to declare bankruptcy as a means of getting their fiscal houses in order?

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11 thoughts on “Topic of the Week: bankruptcy for states?

  1. Indiana if I remember has a constitution ban on assuming debt because of the Indiana Mammoth Internal Improvement Act. Now it is written if it gets into debt the state itself will formally dissolve.

    This just seems like another scheme to further entrench America in debt to the central banks.

    Either way, ‘Raise taxes’ and ‘cut spending’ are not the only two options. Regulation as in taking a hard look at the actual costs and expenditures involved in the pharmaceutical/medical/insurance industry as a whole, cutting waste and eliminating unreasonable profits is the third option – the one that’s never mentioned. It’s also the one that has to be implemented, and which will decrease the need for option 1 and help facilitate option 2.

    1. Huh isn’t it kind of funny that the taxes were at an all time low just before … ?

      Let’s face it, we’ve been SPOILED by how low are taxes are compared to other times in our history.

      Here’s another interesting article. Poll Finds Wariness About Cutting Entitlements and Poll Responses on How to Cut the Deficit. Or as I like to put it, Poll shows most Americans hate taxes until cornered by logic.

      Personally, I think better education is the root of how to fix most of the country’s problems. Like first of all – teaching useful things… like GASP. How to be responsible with credit and stay out of debt, for one. Have some classes on that. I was lucky to have a class on that in school, but I don’t think it’s required when it should be. We should be taught economics as a required course in school too, to understand what is going on.

    2. “eliminating unreasonable profits is the third option”

      HA! You want government to decide what is reasonable and unreasonable when it has a stake in getting that money?! I think you are right that teaching economics is necessary. Like telling people where government gets its money — like the ladies who wanted money from “Obama’s stash.”

      1. I personally think government officials shouldn’t get paid their ridiculous amounts for instance. If they are truly going in there for the people, the shouldn’t be able to raise their own salary and pay raises for private jets to go to the Bahamas on a vacation. (See Jim Sensenbrenner.)

        I personally think the farmers, doctors, scientists, and industrial workers should get more protection than say the insurance industries or the credit card industries. But that is just my personal opinion.

        I’m glad we agree on the economics though, I think economics, filling out taxes, not going into debt, and so on can be mandatory. Life work skills, if that make sense – that should be taught as soon as you’re capable of getting a job. Perhaps not making certain higher math mandatory unless you’re choosing to go to school to be a designer, scientist, or something like that.

        1. T., the 27th Amendment prohibits members of Congress from raising their own salaries. I don’t think their salaries are just too ridiculous, considering the amount of time and travel it takes to be a member of Congress. And if private jets are being abused, you can be assured Jim S. isn’t the only one, so you could just as well have said “see Nancy Pelosi.”

          Not sure what you mean about some professions should get “more protection.” Personally I don’t think government should be in the business of protecting or not protecting certain professions. Interesting that you say farmers should get MORE protection, when they are probably one of the most “protected” in the form of farm subsidies.

          On your point about economics, I could not agree more. Nothing irritates me more around tax time than when people get a refund and are happy that the government is giving them something. Apparently they do not realize a refund is a BAD thing, in that they allowed the government to withhold too much from them all year long and has nothing to do with how much in taxes they do or do not pay. I remember being taught how to write a check in high school (which I found insulting to my intelligence), but what was lacking was a talk about credit card interest and debt.

          1. Jim S. came to mind because in an article it was read that he was the one the members who spent the most on private jets so it was something that came to mind – to be fair I do not stand for many democrat’s spending habits either it’s just equally hypocritical to put a blind eye towards both sides. I’ve last read he might have cut it out, but I’m not too sure I have to read up more on that subject.

            Wisconsin is easily one of the most protective of the states against farmers, mostly to bipartisan efforts in the past and realizing the people come first – but sadly I’m not sure if that’s going to remain the case if we continue to swing in extremism in both directions. Many other states don’t have the rights farmers have in this state, and the smaller family farms tend to get swept under the rug each time. ( Then again, I also wouldn’t mind raw milk being legalized as long as you properly label it, I’d never personally drink it but as long as it’s labeled it should be legal. By dagnamit, if people can smoke and give themselves cancer, I don’t see why you can’t do this as long as it’s labeled. )

            It went into detail in my high school all the time about interest, debt, credit, and so on. It’s a reason why after learning about it I’ve totally learned not to trust credit cards at all under any circumstances. But honestly, as insulting as someone making a check is to your intelligence, you’d be surprised how many people don’t know how to write it. Nor do they even know how to balance their sheet. I’m saying “confidence and making everyone feeling special is a bad thing” because our school did nothing of the sort. It’s more of how they were raised in such ignorance what gets me. Which might be a reflection of their parents buying things they cannot afford because of them abusing credit cards. ( I don’t like making judgments, but that is one thing that comes to mind. )

        2. Sorry I guess we are getting off topic here lol. Bankruptcy for states is a bad thing. But didn’t the state of California do that a time or two?

          1. I’m not sure if California did or not historically, I have to look it up but I know it’s cities did and I know many in California are tossing the idea around it should declare bankruptcy.

  2. We should give all our money to one person and have that person dole it out. Then every four years we should vote for another person to dole it all out.

    Wait, we do that now, don’t we? At least to some degree we vote a political party into office and they dole it out. Every four years.

    What is the difference between a royal family and the royalty of our political party bosses? Both work thru a legislature and the courts to tap the national treasury.

    But I divagate, to answer your question requires that we decide if a state government is a business, organization, or person or if it is something that supercedes them all.

    I believe that a government is unique and has responsiblities that businesses, organizations, and people do not.

    State governments cannot file bankruptcy and have their assets assumed by banks. Their assets include the ability to make law, enforce law, and imprison people.

    One would have to be criminally insane to give GE or Microsoft or GoldmanSachs control over Wisconsin’s laws,regulations,and taxing authority.

    1. Sounds like the perfect argument for conservatism and small government. If you limit the power and money in government, they lose the power to “dole it out,” as you say, as they see fit.

  3. Back in the day when I was in the automobile business, a teacher from a near by high school contacted me to talk to his class about how to buy a car. His class covered common daily household economics. I was asked to explain not only what to ask yourself about what you need in a vehicle, but to review automobile sales contracts, sale auto sales laws, motor vehicle titling and licensing rules, and auto financing. Other speakers over the semester talked about banking, taxes, real estate, leases, etc. I think every high school student should be required to take a similar course.

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