There's a piece written by Mitch Daniels which has attracted a fair amount of attention this morning. Via a Fox article, his chatter is over this....Connecticut, California, New York, New Jersey and Illinois.....are reaching the stage where they will be insolvent. Chief cause? Well....trying to fund pension programs which are beyond imagination. In the case of California, it's a failing bond which amounts upward to $428 billion. Daniels statement is that reality will soon hit the Senate, and in some dramatic way....they will have to save these five states. The taxpayer, in his opinion, is screwed.
The timeline? Daniels doesn't say, and the Fox host doesn't guess. If you were asking me....it won't happen in 2018, or 2019. But I could see Illinois reaching a stage where they ask for some 'gift'....some ten-billion-dollar loan with zero-percent interest and ten years to pay it back. The problem is that paying it back will likely be impossible unless they go and remedy their pension program in a massive way. In some cases, the idiots were stupid enough to write it into their Constitution, and the judges will enforce it to remain. Because of this issue, whoever is President at the time when this comes up....could render a dramatic 'no', and force the state deeper into a pit.
Trump at this moment of chaos? He probably won't be their friend.
I think three dramatic things must occur. First, each state has to remedy its pension (by law or Constitutional efforts) before you can come and request federal help, and that state supreme court must sign off on the pension change. If the two groups won't work to achieve the matter, don't bother giving them a nickel.
Second, the amount of money given shouldn't go over the sum of twenty-five billion dollars per state, with a zero-interest deal for the first five years, and a 3.5-percent interest deal for the second five year period. If they need a third five-year period? Fine....attach the 5-percent interest onto it.
Third and final....write a simple federal law into the deal that once you take the federal loan to cover the pension mess....you can't go and get another loan via a credit group or bank for the same problem, until you've paid off the federal loan.
On the pension amount? This is the curious thing. When you've got some fireman retiring in California at age 55, and he's collecting $120,000 a year on a pension.....there's something wrong. When you have some city finance chief for a town in Illinois retiring, and collecting $225,000 a year....there's something wrong.
So somewhere down the line, some idiot is going to have write and pass a 'limit-law' to say you can't collect more than $40,000 on pensions. If a guy wants to take his promised money and invest into some 401k-type pension deal, then I don't have a problem with that. But I doubt if any of these five states have the type of employees who would accept that deal.
Here's the bad news....Trump is likely around for 6.5 years and the odds of any of these characters approaching the Senate to beg for help? They'd have to convince Trump to help them.....deep-blue Democratic voter states? There's this odd likely chance that it'll be 2025 before they can ask for help and they will go and get even deeper into debt.
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