Jeb Bush—a moderate in a family that invariably goes radical to win—and Newt Gingrich—a radical who calls himself a conservative—have designed an intricate new device to inflame American politics and corrupt representative government.
In “Better off bankrupt,” an article that appeared in the Los Angeles Times a few days ago, they propose new federal bankruptcy legislation to help California, Illinois, New York, and other states address their looming financial circumstances. The legislation is strangely seductive.
Those states that are carrying “staggering” deficits and extravagant pension and benefit obligations would be able to declare bankruptcy. Indeed they make it tempting. By a simple majority, state legislators would be able to throw themselves at the mercy of the court. And, at the same time, the court would be restricted from questioning the legislature’s reluctance to raise taxes or find other means to honor state government contracts and creditors.
Bankruptcy’s grim literal meaning—to be destitute, to surrender your estate, and to have your affairs administered by others for the benefit of your creditors—is neatly circumscribed. The bankrupt state’s sovereignty is effectively left intact: the taxpayers (who elected incompetent state governments) are left untouched and the federal government is not allowed to interfere. Indeed, Bush and Gingrich conclude on a soothing note: “Congress must allow a safe, orderly way under federal bankruptcy law for states to reorganize their finances.”
Bush and Gingrich take as given that dire action will be necessary. What Germany will not dare let happen to Greece, the US Congress should facilitate for California. Yet, there is no domestic American emergency to dignify their idea.
Probably a good majority of Californians now loathe many of the collective agreements undertaken by previous California governments. The article reported that some 12,000 state and municipal retirees will get $100,000+ pensions this year. However, it’s laughable to suggest that California doesn’t have the means to pay its bills.
California is one of the richest places on earth. Its GNP is 3.5 times greater than the province of Ontario. And Ontario also has a deficit of over $20 billion, along with an excellent credit rating.
Since the villains are identified as bullying union bosses and pandering politicians in largely Democrat states, it is fair to infer that Bush and Gingrich are looking to excite fellow Republicans. Fine. But let’s stop calling them conservatives. Conservatives don’t finesse the breaking of contracts.
Reagan’s conservatism was disputed by many economists and fellow Republicans when he insisted that tax cuts would pay for themselves. These two gentlemen are peddling something far more mischievous: “If you don’t want to pay for what we’ve done, with the authority you granted us with your votes, we’ll simply declare bankruptcy and leave you scot free.”
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