U.S. government may face a bailout for states over the next 12 months

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investorzzo's picture
investorzzo
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U.S. government may face a bailout for states over the next 12 months

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http://www.bloomberg.com/video/63384626/

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http://www.bloomberg.com/news/2010-09-30/meredith-whitney-says-u-s-may-f...

dshields's picture
dshields
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Re: U.S. government may face a bailout for states over the ...

the fed gov can not bail out the states.  the numbers involved would be litterally fantastic.  states are going to have to do what we are doing here in new jersey.  elect politicians that will undertake the very difficult job of bringing spending in line with revenues.  as we are finding out here, this is a very difficult thing to so.  over the years the state employees have been unionized.  i started a thread on this topic a few weeks ago.  it should be illegal for government employees to unionize for a number of different reasons.  anyway, for the first time there are more union members in government than in the private sector.  that is so broken.  the states are just going to have to cut services.  the class of dependency is going to get hit hard.  people are going to have to move out of the class of dependency and into working at jobs in the private sector.  that is a real problem right now as there are very few jobs to transition these people to.  an additional problem is many of the class of dependency have very poor educations.  it is all very difficult.  we were asleep at the wheel and worked ourselves into a really big hole at the state level.  it will take decades to work back out of it and a lot of social issues will create massive resistance to transitioning the government dependent into the private sector work force.  when the class of dependency gets large enough they will simply vote to stop it.  the result of that will be financial implosion at every level.  we might just implode anyway due to a bunch of other factors that people on this site are well aware of.  but, i suppose we have to try.  christie is actually making a lot of progress here in new jersey and we were one of the worst states from a financial point of view.  it can be done but it requires enormous determination.  and, once again, the entire process can be short circuited by a class of dependency vote.

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Re: U.S. government may face a bailout for states over the ...

I've heard figures that if we add the states' debt to the 128 tn of debt and unfunded liabilities that we are at or around the 200-220 tn dollar mark. I have no idea if this is accurate since its been months since I've read up on this.

If California can issue IOUs over and over I would not put anything outside the realm of being possible - bailouts of states included. A lot of the shovel ready stimulus was sold by local municipalities and used to pay debt.

Totally agree about the unionization and the political clout they wield.

This entire thing is one huge insane asylum. 

investorzzo's picture
investorzzo
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Re: U.S. government may face a bailout for states over the ...

I live in Washington state, where they are contemplating a state imcome tax. Maybe other states will follow. That way the federal Gov. doesn't have to be the bad guy. Just have the states take the fall......

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dshields
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Re: U.S. government may face a bailout for states over the ...

in new jersey we have a state income tax (in my wage bracket) of 6.37 percent and a state sales tax of 7 percent.  I pay property tax that is 4.3 percent of my gross.  so my state and local tax burden is 17.7 percent of my gross.  that's a lot.  i don't want to pay any more.  that's enough.  when you add in the fed it goes to 50 percent or more.  that's enough.  i am not going to pay any more taxes.  i am going to vote against any one i even suspect might entertain increases in taxes at any level in government.  that's it.  that is all there is to it.

 

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silvervarg
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Re: U.S. government may face a bailout for states over the ...

Always interesting to read about tax-systems that differ a lot from the one you are used to (even if I am fairly familiar with basics of the US tax-system).

I heard/read some rumours about a fedral sales tax that might be coming in the future. Any news on that side?

When you are not even close to getting a healthy budget together there is only two options: increase income or decrease expenses (or both).
At this point most highly educated in economics that I have read says that US needs to do both.
Examples of fixes:
Reduce foreign military forces.
Put a temporary stop of hireing in the public sector and freeze salaries at current level. (This "temporary" could turn out to be years.)
Add tolls on many imported goods.
Decrease pensions, healthcare etc. They might even "steal" from the 401K's in some ingenious way. E.g. deluting the value.
Create insane amounts of money and try best you can to hide the official inflation numbers.

Some of these "fixes" may seem far fetched, but most has been done in either US or some other country that has been hit by the financial crisis.

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Re: U.S. government may face a bailout for states over the ...

government at all levels, fed, state, and local, are going to have to cut to live within their means - period.  raising taxes is not a good idea.  in addition to the fact that we are already paying outrageous taxes, somewhere around 60 to 70 percent of the economy is consumer spending.  if we take away even more of the consumers money then they will obviously spend less causing even further economic disruption.  nope - can't bail out the states.  we simply can not afford it.  at some point it all comes down to that.  we can't afford it.  we have to cut spending at every level of government.  we have to get our priorities in order and cut and then cut some more.  no more crazy wars, no more massive government handouts, no more spending madness.  the dems are the worst on this stuff but the last crop of repubs look pretty bad too.  just a few months ago the dems were going around talking about raising taxes on everything they could find including the NEVER to be allowed VAT.  when they realized they were going to be literally wiped out at the polls next month they did a massive turn around and now they are claiming the opposite.  personally, i believe that they were telling the truth before they got scared and now they are lying every single day.  where are the dem candidates claiming they should be returned to congress for their obama care vote or their vote for cap and trade ?  where are the candidates running on their votes for increasing the taxes for every person who pays taxes in america ?  where is charlie wrangle with his "mother all of new tax bills" ?  where are those folks ???  those politicians were elected by their constituencies and then they turned on them and voted against their will and against their own people's best interest.  now they are going to pay the price for their shocking behavior.  november 2nd - judgment day...  lying politicians are going to be removed to a large extent - at least the ones the people can get their hands on this election cycle.  then we will see how the next batch do.  if they suck then they go also.  no more bails outs, no more crazy spending, no more crazy wars, no more crazy anything.  we stay home and we cut and we cut some more.

if we do that then government will be back on its way to normalcy, business will have more confidence in being able to plan for the future, the dollar will stabilize, the world will understand that america got fat, dumb, and complacent and quit taking elections seriously.  a mess of people who never should have been elected got elected as a result and then we made a series of really big mistakes that took us to the edge of disaster.  then we had a wake up call, and got our act back together and now we are determined to put america back on the path that made her the amazing nation she used to be.  we may take a dive and go off the cliff anyway due to the many big problems we face, but at least we will be able to go down trying to do the right thing.

there - lol - my rant is over - no bailout for the states.

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Re: U.S. government may face a bailout for states over the ...
investorzzo wrote:

I live in Washington state, where they are contemplating a state imcome tax. Maybe other states will follow. That way the federal Gov. doesn't have to be the bad guy. Just have the states take the fall......

Note dshields post just below yours, about his harsh NJ income tax. Until mid-1976, NJ had no income tax. Then a 2.5% income tax was introduced, supposedly to solve educational funding problems forever. 

Well, guess what? Education is still in crisis in NJ, probably because funding was only one of several problems. But the harmless little 2.5% income tax steadily crept up to a confiscatory 8.97% top marginal rate today. With its accompanying high property taxes, NJ has turned into a dismal tax hell. Its formerly vibrant economy, graced with a high proportion of engineers and scientists, lies stagnant.

The terrible irony is that NJ gets nothing for its income tax, as compared to no-income tax states such as Tennessee, Florida and Washington. All that the income tax booty gave NJ was a vastly overstaffed and overcompensated government sector. If NJ had remained income tax free, today it would be a flourishing tax haven in the high-tax Northeast -- a veritable Hong Kong, with the rest of the Atlantic seaboard as its trade hinterland. But this brighter future was sacrificed on the altar of government greed -- with a strong political push from the teachers unions, who always favor higher taxes.

Washington state will be making a terrible mistake if it adopts an income tax. It's one of only nine states without one (on wages). Alaska, Wyoming, South Dakota, Nevada and Texas will happily accept Washington state's tax exiles and refugees.

Don't Californicate Cascadia!

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dshields
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Re: U.S. government may face a bailout for states over the ...

hip hip hooray for machinehead - you are the man and exactly correct.

the current situation it directly the fault of politicians.  there is nobody else to blame.  christie is trying to do something with it but the problems nj faces are very difficult to solve.  as usual, it comes back to the politicians - it pretty much always does.  shame on the politicians.  they have messed up big time over the last few decades.  and even more so, shame on us the people for getting lazy and stupid and not paying attention and letting the politicians get away with what they have done.

- horns blowing and a drum roll -

do not wimp out and claim it does not make a difference - you must vote for people you believe will make the right decisions to bring government at every level back under control of the people.  if we have any hope of confronting the serious problems of the future that are discussed every day on this site we simply must get responsible people into high positions in the government to start making prudent decisions.  even with good people running the government we are still facing simply enormous problems that could take us down.  there is no hope if the government is out of control.

 

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