You will probably ignore this, unless you live outside the US. Pity, because it will affect the US more.
G’head. Ignore it. Or don’t. Really there ain’t much you can do about this one, despite the fact this probably will affect you far more than the colossal stupidity of the federal bailout programs of recent times.
Most likely, your state is in bad financial shape. Most are. Only a few have managed to hold their own.
Even those states in good shape may not be that way much longer.
Why? Pensions and bonds.
For many years having a state job meant a pension that was as certain as the other two certainties in life - death & taxes.
Except it may not be that certain any more.
To wit: Should states be allowed to declare bankruptcy?
Why does this matter to you, especially if you don’t get a state pension and really don’t have a clue about bonds?
Pensions matter because retirees have based their lifestyle around these pensions. Again, you say what’s this to me?
Retirees are often a major economic retail source for a community. They grease the wheels of commerce. Not as much as the labor force, no, but they do have a major impact. You probably have members in your family who’ve retired on state pension. If they lose their income, what are they gonna do and how are they gonna do it?
Retired employees on the state pension also wield amazing clout in state legislatures through their unions and associations. Further those who are still working and get state pensions are gonna have a lot to say as well.
When you figure in retirees and active workers, you are talking about a MAJOR MAJOR economic impact. Pick the biggest employer for your community. Chop it in half and see what the impact is gonna be.
Cuts to the state pension program could be even worse.
As for bonds, they also matter. Why? Road and bridge work mostly. Heavy infrastructure that keeps the economy rolling. Why does this matter?
Without good roads and rails, it’s gonna cost more to get goods from Point A to your door. Guess who is gonna pay that? You.
If state’s belly up on bonds, then getting new bond is gonna cost more money.
Who repays state bonds anyway?
You do. If the interest rate goes up, it’s gonna cost more to repay those bonds, which means your state is coming after your wallet that much harder.
So should states be allowed to declare bankruptcy and put their fiscal well being into a federal judge’s hands?
Me, I say no. I say people in each state should decide what they want to do and get the Legislature to do it. If that means raising taxes, so be it. If that means cutting services and benefits, so be it. If that means cutting pensions and getting fewer bonds, so be it.
Hard decisions are coming. Fast.
It’s a complicated situation, I completely agree. But like most things, there is a simple solution, which few people will like.
Cut spending. That means cut everything. I would exempt veteran benefits, but that’s just me. Disclaimer: I do not benefit from any veteran services as I was never in the military.
Cut everything. Quit living off the government teat (government, you may recall is just you and me) and learn to live off yourself. If you need help, fine, but how about looking to non-taxpayer funded sources?
If people can’t do the cuts necessary - correction: WHEN people WON’T do the cuts necessary, then turn things over to an independent and arbitrary source who is NOT accountable in any way to the voters and taxpayers, i.e. a bankruptcy judge and see if you like his decision.
Yanno, now that I’ve written this, I have changed my mind. If CAVE and NIMBY voters and taxpayers are so determined to keep their head buried in the feed trough then, yeah, let’s get someone who ain’t beholden to the voters and taxpayers to make a decision. Maybe then people will decide they really want to take back government.
Nah. Won’t happen. But it’s nice to think it could happen.