by: JD Heyes
Monday, April 13, 2020
We’ve been carefully monitoring the fiscal health of several states with mounting pension fund debt for several years because a couple of them have been teetering on the edge of bankruptcy.
One of them was California, but thanks to the omnipresence of successful tech start-ups in Silicon Valley, the state’s Democrats who created the pension nightmare have so far been able to tax their way out of collapse.
Not so much for Illinois. We reported in June 2017:
The Land of Lincoln has been wrestling with underfunded pensions and over-promised benefits now for years, but in recent months the situation has gotten so bad that Illinois could be the first U.S. state to declare bankruptcy.
In October, USA Today cited Pew Charitable Trusts data to report that state pension systems had less than 70 percent of the assets they need to pay out benefits owed current or retired public employees and officials.
Mind you, this isn’t a federal government problem — the Feds have money troubles of their own, and they just got worse after passage of a $2.2 trillion coronavirus stimulus package that is already being called too little by spendthrift Democrats (naturally).
Well, governors and state legislatures who have been unable to solve their own debt problems now see an opportunity to wipe their pension debt clean, compliments of you, abused taxpayer: They are demanding Congress cough up another $500 billion to help offset revenue losses caused by their orders to shutter businesses in their states.
There are two ways to look at this
The Washington Times reported:
In a statement Saturday, the National Governors Association, a bipartisan group of 55 governors, said the stay-at-home orders issued across the country have crippled state economies.
The organization’s chair, Maryland Gov. Larry Hogan and the vice chair, New York Gov. Andrew Cuomo, said the stimulus package Congress recently passed overlooked the states’ needs when it comes to the crippling economies and lost revenue that funds a state’s needs.
“We must be allowed to use any state stabilization funds for replacement of lost revenue, and these funds should not be tied to only COVID-19 related expenses. Congress must amend the CARES Act to allow this flexibility for existing federal funding,” the organization said in a statement.
There you go. They are demanding that Congress saddle our kids and their kids and their kids with unbelievable debt so they can use the money here and now to pay off a debt they created or inherited without solving.
Now, there are two ways to look at this.
One, the states should be compensated for the loss of revenue because they were acting on federal guidelines regarding ways to mitigate the spread of the Wuhan coronavirus (COVID-19).
But on the other hand, President Donald Trump did not issue a national shutdown order from on high (and some constitutional scholars say he doesn’t have the authority to do so anyway). State governors and city mayors issued those orders, and not all of them did so. As such, why should federal taxpayers and Congress bail out the states that did issue those orders?
“The people themselves are primarily responsible for their safety,” said South Dakota Gov. Kristi Noem, who said that both her state’s and the U.S. constitutions “prevent us from taking draconian measures much like the Chinese government has done,” according to CNN.
Other governors, such as Nebraska Gov. Pete Ricketts, say their decisions not to impose a statewide lockdown order “are based not on the advice of national health leaders but rather those in their own states,” USA Features News reported.
If a governor shut down their own economy, then it seems really unfair to make the entire country bail them out.