Kirk: No state bailouts
Friday, Aug 2, 2013 - Posted by Rich Miller
* I think this is the third time that Sen. Kirk has filed this resolution. From a press release…
U.S. Senator Mark Kirk (R-Ill.), along with Senators Kelly Ayotte (R-N.H.), John Barrasso (R-Wyo.), Dan Coats (R-Ind.), Mike Crapo (R-Idaho), Ron Johnson (R-Wis.) Marco Rubio (R-Fla.) and Richard Shelby (R-Ala.) today introduced the No State Bailouts Resolution, S. Res. 215, which expresses opposition to the Federal bailout of financially struggling states like Illinois.
“This resolution expresses our support for blocking potential state bailouts and reducing states’ spending - restoring confidence to lenders and lowering borrowing costs,” Sen Kirk said. “Encouraging fiscal responsibility will help protect the Federal Government’s credit rating.”
The No State Bailouts Resolution declares that the States, as sovereign entities, retain control over their spending and taxation, and are therefore responsible for their own debts. The resolution also states that historic precedent opposes a bailout of the states, citing the historic example from the financial crisis of 1842. In the 1840s, several states faced funding crises, having spent so much that they could not repay their creditors. In 1842, the Senate requested then-Secretary of State Daniel Webster report any negotiations with state creditors to the Senate, in order to ensure no promises of Federal Government support were offered. As such, the cosponsors agree that the Federal Government should “take no action to redeem, assume, or guarantee State debt.” States should see this resolution and recognize that the Federal Government is not going to bail them out of a fiscal insolvency and that the elected leaders in these states should take responsibility, and adopt measures to become fiscally responsible— balancing their budgets the way that every American household does.
* No bailouts for states and local governments, but oodles of money for foreign aid…
Detroit may be bankrupt, but more federal aid dollars are set to go to the country of Colombia than to America’s 18th-largest city next year, according to a report from Bloomberg News.
Bloomberg reports that the South American nation will receive almost $323 million through President Barack Obama’s new proposal to fight drug trafficking and violence. A State Department memo cited by the report says three-quarters of the money will be used to maintain “peace and security” in Colombia.
Conversely, Detroit, which filed for bankruptcy almost two weeks ago with at least $18 billion in long-term debt, will receive just $108.2 million in funds from the U.S. government in 2014, according to Bloomberg. Some $33 million of that total award is funded by a Community Block Grant distributed each year to urban cities and counties.
Detroit’s murder rate is nearly twice as high as Colombia’s, increasing 10 percent in 2012 to 53 murders for every 100,000 residents — second only to New Orleans among U.S. cities. Despite that sobering fact, the Detroit Police Department is currently eligible to receive just $2 million in funds next year from the feds.
Discuss.
- Bill White - Friday, Aug 2, 13 @ 10:27 am:
Also too, oodles of money for defense contracts that are more about funneling money to select states than protecting our nation from actual, legitimate external threats.
- AFSCME Steward - Friday, Aug 2, 13 @ 10:27 am:
While I agree in principle with this position, the federal government is partially responsible for the crisis facing some states through unfunded mandates. Programs such as the Food Stamp program (SNAP) are 100% federal programs that are administered by the states. Part of holding the states accountable is holding the feds accountable as well. Is the federal goverment paying the states the actual costs to administrate these programs, or are they penny pinching & dumping a sizeable chunk of financial responsibility on the states. I think the later of the two is what’s happening.
- wordslinger - Friday, Aug 2, 13 @ 10:30 am:
I give Kirk points on gay marriage and standing up to the NRA, but enough with the lectures from Congress on how to run things.
It’s not like anyone thinks that the national government could get its act together to do anything right now, much less bail out the states.
The current Congress is borderline certifiable in its dysfunction. And they like it that way.
- PublicServant - Friday, Aug 2, 13 @ 10:30 am:
What is the net federal contributions that Illinois is making to the feds? What would retaining the net outflow of Illinois tax dollars in state, and offsetting that retention by witholding federal dollars from states that have a net inflow of federal dollars do to aid in reducing Illinois deficit? Just wondering what the numbers are there.
- Mason born - Friday, Aug 2, 13 @ 10:32 am:
– but oodles of money for foreign aid…–
Good point Rich. We need to ask Kirk if he supports ending Foreign Aid as well. I actually agree with no bailouts for the States but you are right foreign aid needs to be a memory as well.
- Formerly Known As... - Friday, Aug 2, 13 @ 10:32 am:
=== will receive just $108.2 million in funds from the U.S. government in 2014 ===
Bloomberg appears to reference only cash payments directly to the city.
That fails to include the millions (billions?) of dollars in federal aid to citizens of Detroit in the form of SNAP, Medicaid, etc.
While Detroit could clearly use a hand up during their hour of need, Bloomberg makes it sound like the American government is spending more aiding Colombians than Detroiters.
That is simply not true or accurate.
- foster brooks - Friday, Aug 2, 13 @ 10:33 am:
I’m glad kirk has our back, glad I didn’t serve with him.
- Rich Miller - Friday, Aug 2, 13 @ 10:37 am:
===makes it sound like the American government is spending more aiding Colombians than Detroiters===
The story is clearly about government funding of other governments, not individuals. So, stop with the red herrings, please.
- Mason born - Friday, Aug 2, 13 @ 10:43 am:
I actually wish we could get a vote on this one in Senate and House. I have heard the sentiment among the more liberal of my friends that Obama would come help us out of our mess. I don’t know how many people state wide think that but it would be nice to pop that fantasy. IMHO the sooner the voters in the state realize that there is no one coming to rescue them then the sooner we can get back to reality.
- PoolGuy - Friday, Aug 2, 13 @ 10:44 am:
what happened to the historical precendent of the Fed as the “lender of last resort” for financial institutions, and the U.S. as the international lender of last resort for foreign countries via the IMF, World Bank, etc.? we can bail out banks and give loans to foreign nations, but can’t help U.S. states?
- Rufus D Doofus - Friday, Aug 2, 13 @ 10:44 am:
A Big Gold Star to you Sen Kirk. It isn’t every day you can find a member of Congress to deny spending to this or that entity!(sarcasm)
- PastorMike - Friday, Aug 2, 13 @ 10:53 am:
“… and that the elected leaders in these states should take responsibility, and adopt measures to become fiscally responsible— balancing their budgets the way that every American household does.”
And the Federal Deficit is what?????
Pot calling kettle black.
- Rahm's Parking Meter - Friday, Aug 2, 13 @ 10:53 am:
The one thing I would like to point out about foreign aid is that a lot of that money has to by law, be spent back in the United States. So therefore, looking at foreign aid as a giveaway is incorrect. That is why you see foreign airlines and militaries buying Boeing (American) aircraft, or all of the American companies overseas. Foreign aid has to be looked at as an investment in overseas markets to buy American, therefore an economic as well as in some cases, national security and humanitarian investments… (Full disclosure, I work for a group that does lobbying on the foreign aid bill).
Now getting off my soap box and back to Sen. Kirk, he has tied himself economically to the GOP agenda, while being a social moderate or dare I say liberal. But signing letters saying you oppose state bailouts at any cost or you are willing to shut down the government over Obamacare (he signed the Cruz-Lee-Rubio letter), or blocking the THUD Bill (Where does DC Come up with these names?) that gives infrastructure money to states like Illinois (http://tpmdc.talkingpointsmemo.com/2013/08/senate-republicans-filibuster-transportation-housing-bill.php) while talking about rebuilding O’Hare out of the same mouth, not smart for 2016.
- Demoralized - Friday, Aug 2, 13 @ 10:55 am:
This is a political stunt, plain and simple. There has NEVER been anything remotely suggesting that such a “bailout” program would ever exist. It’s more crying wolf by these people.
- Small Town Liberal - Friday, Aug 2, 13 @ 10:56 am:
This is just insanity. Folks are hurting, through no fault of their own, because a bunch of hedge fund hustlers steered our economy into the ditch, and Kirk and his pals think those hurting deserve the punishment.
How about a resolution for no big bank bailouts?
Instead it’s the usual “everyone needs to pull themselves up by their bootstraps” nonsense, unless you’re a foreign country with resources our business interests would like to exploit. How average people buy this will never make sense to me.
- Lil Squeezy - Friday, Aug 2, 13 @ 10:57 am:
Cocaine is still easily available. Sorry Detroit but it still looks like we have some money to spend on the War on Drugs.
I am actually a proponent of increased foreign aid, but the War on Drugs continually hurts our citizens more than it helps. Arrest a drug dealer and he will be replaced by another drug dealer. Help Columbia crack down on cocaine production and Bolivia will increase its production.
Of course its not as simple as that, and of course I want to help Columbians live in a country not controlled by drug lords. But if Detroit’s murder rate is twice Columbia’s I think its fair to say we should re-prioritze our spending.
- Publius - Friday, Aug 2, 13 @ 10:57 am:
Mark Kirk favors giving $3.1 billion per year in foreign aid to Israel, equivalent to $425 per Israeli citizen where GDP per capita is $31,000.
But he would give nothing to a state like Michigan, where per capita income is $35,000.
Kirk is only willing to give aid to FOREIGN, WEALTHY moochers, thank you very much.
- RNUG - Friday, Aug 2, 13 @ 10:57 am:
Since states are supposed to control their own spending, then Kirk should also for the Federal Government eliminating any unfunded or only partially funded mandates and programs imposed on the States …
- Rufus D Doofus - Friday, Aug 2, 13 @ 10:57 am:
That means NJ also Gov Christie.
http://www.my9nj.com/story/22989373/camden-tent-city
- RNUG - Friday, Aug 2, 13 @ 10:58 am:
The funniest part of the whole statement is Kirk’s belief the Federal Government has a credit rating to protect …
- Judgment Day - Friday, Aug 2, 13 @ 10:58 am:
Actually, municipalities are going to be bigger problems then are the states. For example, closer to home we have…
http://www.zerohedge.com/news/2013-07-28/chicago-next-windy-city-cash-balance-plummets-only-33-million-debt-triples
Sen. Kirk, while well intentioned, probably needs to focus more on where the real problems are, which looks to be the City of Chicago and Cook County, not so much the State of Illinois.
Btw, for all the posters talking about the constitutional guarantee for pensions, well, that is extremely likely to get addressed under the Detroit bankruptcy. See an article written by David Skeel titled “Facing Up to America’s Pension Woes” in the WSJ dated 07.25.2013
Even though Illinois municipalities can not declare bankruptcy because state law does not allow it, Michigan has very similar constitutional language (Article IX, Section 24 of the Michigan state constitution).
Yet in Michigan, the Bankruptcy Court is likely to have to address the legal question of whether Chapter 9 allows a municipality to reduce it’s pension obligations.
Here’s the link to the article: http://online.wsj.com/article/SB10001424127887324110404578625904218607438.html
- RNUG - Friday, Aug 2, 13 @ 11:05 am:
Judgement Day @ 10:58am,
yes, it will be informative to see what happens. However, we need to keep in mind a state has vastly more ways to raise revenue than a city and that, to date, IL courts have had a stricter interpretation than MI of the pension language, even though the language and intent are the same.
- Judgment Day - Friday, Aug 2, 13 @ 11:07 am:
“Even though Illinois municipalities can not declare bankruptcy because state law does not allow it, Michigan has very similar constitutional language (Article IX, Section 24 of the Michigan state constitution).”
That should have read:
“Even though Illinois municipalities can not declare bankruptcy because state law does not allow it, Michigan does allow municipalities for file for bankruptcy. Regarding pension obligations, Michigan (like Illinois) has very similar constitutional language (Article IX, Section 24 of the Michigan state constitution).”
That’s better.
- wordslinger - Friday, Aug 2, 13 @ 11:09 am:
State obviously have the ways and means to fix their own budgets.
That’s not to say that the national government does not support some states more than others.
Historically, taxpayers in northern industrial states like Illinois have kicked in more to prop up those rugged individualists in southern and western states.
The ranking table is at the bottom of the link.
http://en.wikipedia.org/wiki/Federal_taxation_and_spending_by_state
- Formerly Known As... - Friday, Aug 2, 13 @ 11:12 am:
I didn’t mean to throw that out there that as a red herring. To clarify, when I hear “federal aid” I immediately think of the overall picture. In ym view the term encompasses everything from disaster relief to public health and combating hunger, and it seemed to me the author was selectively comparing apples to oranges.
If the premise is, Should we send less money overseas for foreign assistance in order to strengthen ourselves on the homefront? I concur.
If the premise is, “more federal aid dollars are set to go to the country of Colombia than to (Detroit)”? Well, that’s not how I would have phrased it or looked at it.
Just want CapFax to know that wasn’t my aim to throw out a red herring or driven by some ideological rhetoric. Or at least Rich to know that, if he holds this comment, lol.
- The Muse - Friday, Aug 2, 13 @ 11:16 am:
Sen. Kirk: But Rich, if we don’t send foreign aid, how will we continue to prop up these, umm, continue to spread democracy throughout the world?
- Judgment Day - Friday, Aug 2, 13 @ 11:16 am:
RNUG,
regarding “IL courts have had a stricter interpretation than MI of the pension language,”
the problem is going to be that (a) IF Chapter 9 wins out up in Michigan, and (b) IF Illinois ends up in federal court over pension reform, then life is going to get really interesting.
Just think about where that one could go.
- Bill White - Friday, Aug 2, 13 @ 11:24 am:
How might Illinois end up in federal court over pension reform? Under what possible scenario?
- Mason born - Friday, Aug 2, 13 @ 11:31 am:
@Word
Not to put a fly in your ointment on western/southern states. However the biggest influence in that area is Military Spending which is primarily located out west or south. Mainly due to remnants of Civil and Indian War facilities that were transitioned into federal institutions.
Look at the massive spending in Hawaii largely due to Pearl Harbor, Camp butler, etc.
- Ahoy! - Friday, Aug 2, 13 @ 11:32 am:
Isn’t it time we do “some nation building at home?”
- Boone's Is Back - Friday, Aug 2, 13 @ 11:38 am:
How about he files one that applies to banks?
- Small Town Liberal - Friday, Aug 2, 13 @ 11:43 am:
- However the biggest influence in that area is Military Spending which is primarily located out west or south. -
You think Mississippi eats $6700 per citizen because of military spending? I’ll have what you’re drinking.
- foster brooks - Friday, Aug 2, 13 @ 11:54 am:
I believe Illinois is a donater state when it comes to road funds. Sending more than it receives.
- Responsa - Friday, Aug 2, 13 @ 12:07 pm:
Sen. Kirk may have his ear to the ground on this issue more than some here want to believe. “Bailout” has become a very dirty word to a lot of taxpaying citizens of this country regardless of party affiliation and whether we’re talking banks, car companies, states or cities. The picking and choosing and who gets to do it is a big part of the concern as is clearly evidenced even by the varied comments here. “Bailing out” failed/failing/irresponsible entities has never been the federal government’s responsibility or duty. And yes, a lot of people think that foreign aid should be more carefully managed and probably cut as well.
- Cook County Commoner - Friday, Aug 2, 13 @ 12:14 pm:
I’ve watched on CSPAN a couple of times federal legislators orate about the need for the feds to assist fiscally troubled states. Maybe Kirk and like minded legislators are returning the serve in some sort of policy tennis on state aide going on in Congress.
One thing is certain: Senator Kirk is not fond of Springfield. I listened to him call Springfield a “cesspool” twice in an an interview with Carol Murin on Chicago Tonight a month or so back. I think he used the word three times. Surprised his comments didn’t make news.
- shore - Friday, Aug 2, 13 @ 12:45 pm:
He’s historically been one of the biggest supporters of foreign aid ranging from supporting us efforts to wave billions in loans other countries owe us so it’s a clean 2016 hit IF he runs again which I think will be incredibly hard. “He supports foreign aid for micronesia which abuses women, but voted to cut (food stamps) (funding for cancer research to help save moms) ect.
- Grandson of Man - Friday, Aug 2, 13 @ 12:46 pm:
I’m sorry, but I have to say this again. It’s what comes to mind when I read these stories. What about the sovereignty of Iraq? We didn’t have any regard for that, as we spent nearly $1 trillion (maybe more) for lies about Iraq’s involvement in 09/11 and WMD’s. We’re on the hook for a lot of money. How many people who are against any bailouts of American governments were howling for us to get into Iraq?
I want my tax dollars to actually help me and people like me.
- 47th Ward - Friday, Aug 2, 13 @ 1:02 pm:
While I think Kirk’s resolution is right, the feds shouldn’t bail out the states, it still sticks in my craw that the shareholders of JP Morgan, Goldman Sachs, AIG, etc., were rewarded for poor decisions they made but taxpayers are on the hook for the poor decisions made by our elected officials.
I, for one, believe Illinois is too big to fail.
- Ghost - Friday, Aug 2, 13 @ 1:08 pm:
The austerity no bailout stuff does not work. it drags donw the whole economy and makes everything worse.
I would point out that many GOPers were opposed to bailing out the banks and autot industry. They argued that they should collapse, and we would ultimately be better off. We did bail them out, and at the end of the day made a profit on the bailouts.
During the depression a large part of the recovery occured because of governemtn work programs helping to stimulate the economy. it turns out that the most prudent economic course is not to crash economies and spiral people into unemployement, its to shore up those entities and keep people employed.
If there need to be spending controls then Kirk should work pliotically for change. But kirks premise seems to be that the government putting money into the economy is bad, and I disagree.
- wordslinger - Friday, Aug 2, 13 @ 1:53 pm:
Geez, Racer, a gold bug? You might as well put all your money in frankincense and myrrh, too. Makes as much sense.
- Mason born - Friday, Aug 2, 13 @ 1:58 pm:
I think i’ve found Kirks reasoning. I know it is Detroit not the states but something tells me a safe bet that you’d get the same result.
http://www.realclearpolitics.com/articles/2013/08/02/dems_favor_federal_bailout_of_detroit_public_does_not_119482.html
- Racer - Friday, Aug 2, 13 @ 2:03 pm:
WordSlinger obviously you didn’t watch the whole video(44 mins long) and if you did you would have a better understanding what we are up against.
- wordslinger - Friday, Aug 2, 13 @ 2:18 pm:
–Not to put a fly in your ointment on western/southern states. However the biggest influence in that area is Military Spending which is primarily located out west or south. Mainly due to remnants of Civil and Indian War facilities that were transitioned into federal institutions.–
In regards to military facilities, I’d suggest it was mainly due to the stranglehold old Southern Dem Congressmen had on committee chairmanships during most of the 20th Century.
I think Gens. Sherman and Sheridan took care of any former Civil War military facilities located down South.
In addition, many federal formulas are tilted to lower per capita income and that translates well in many of those states. As do ag programs.
- funny guy - Friday, Aug 2, 13 @ 2:26 pm:
If federal law through the bankruptcy court can force retirees to take a haircut on their pensions, shouldn’t it also be able to force a City to sell assets not central to its mission as a municipality.
Fortunately, the City of Chicago has O’Hare airport that it can sell for—$10-15 billion??? (based on Midway being sold for $2 billion) By federal law, revenue generated at airports stays at the airport. So, if the asset is not helping a City financially, sell it and use the money to pay the pension liability.
- Mason born - Friday, Aug 2, 13 @ 2:31 pm:
@wordslinger
As to those civil war military facilities you are forgetting the reconstruction era forts such as Fort Benning GA. A question have you ever seen a table corrected to remove military spending i have not?
As for per capita that is part of the problem with huge programs. i.e 55k is a low salary where you are but here where i live 55k is fairly comfortable and a decent salary.
However we are digressing.
- Mason born - Friday, Aug 2, 13 @ 2:41 pm:
@Wordslinger
Let me correct myself Fort Benning was not a Reconstruction era fort. There were 20,000 troops deployed to the south in five different districts. These troops rebuilt, for their own usage, previously destroyed military facilities.
I do not know why Benning popped into my head but benning was established in 1918 a little while after reconstruction.
- wordslinger - Friday, Aug 2, 13 @ 3:16 pm:
Mason, the biggest stateside U.S. bases — Ft. Hood, Ft. Bragg, Ft. Campbell, Ft. Lewis, Camp Lejuene, Norfolk Naval, Eglin AFB, Jacksonville Naval Air, SC Naval Weapons — were all built between WWI and WWII.
All are in Dixie except for Ft. Lewis, which is in WA.