Moral bankruptcy leading states to financial bankruptcy

How mind-bogglingly crazy is it that several states—including my own New York—are considering bankruptcy?

Of course, states don’t qualify for bankruptcy, but a move is afoot in Congress to create a kind of bankruptcy-like status for states.

Bankruptcy for states would raise huge issues of sovereignty. It would throw the municipal bond market into chaos. It would just downright look bad, undercutting what little public faith remains in government. There are all sorts of reasons why this could be hugely problematic.

But worst of all, it would be a loud-and-clear admission by lawmakers that they can’t get their fucking acts together and behave responsibly.

Has it really come to this? Have our lawmakers finally reached the point that they’re SO irresponsible with spending and SO unwilling to make hard choices that they’d rather plunge themselves into financial insolvency? I mean, we’re talking our governments here.

The problem, of course, is that governments want to be all things to all people, and that’s just impossible. As a result, government ends up doing too many things and does them all poorly. It throws money at every possible problem, getting terrible returns on investment (otherwise, we’d have fantastic school systems and a state-of-the-art infrastructure and a super-healthy population).

I generally believe less government is better than more government, but I also do recognize that government plays a key role in a lot of things. I believe in good infrastructure. I believe in public safety. I believe in safety nets.

But I also believe in helping people help themselves and each other. I believe in accountability, in policing for fraud and waste. I believe in setting priorities.

Most lawmakers will say they believe in those things, too—but how many of them are making the hard decisions and setting the difficult priorities? Who’s saying, “Enough”?

Perhaps this begs the question “What should get cut, then?” I could offer my own suggestions, as I’m sure most readers could, too. But that’s not the point. We elect people to do that. We pay them to debate and discuss and decide. It’s their job to make the tough decisions, not mine, regardless of what my ideas might be. I’m not passing the buck or dodging the ball or abdicating any responsibility by saying that. That’s their job; that’s what my taxes pay them to do. When I was president of the local school board, I was in that same position, and I had to make tough choices and it wasn’t fun—but that’s what people elected me to do. Believe it or not, it was not especially helpful when armchair quarterbacks, who did not have the benefit of all the information I had, showed up with their well-intentioned but hair-brained ideas about what cuts to make. Because I served in that position, and because I had that information, I had a responsibility.

Lawmakers, too, have a responsibility. And they aren’t living up to it.

In most cases, the situation is more grim for states than even their bottom lines suggest. Take into consideration the number of unfunded mandates states pass on to local municipalities and school districts and you’ll get a clearer picture of the true cost of doing business. If a state had to actually pay for all the things it demands, then insolvency would’ve come a long time ago. Instead, those costs are hidden at the state level because they’re passed down to the local level—where municipalities and school districts are likewise facing crushing financial situations.

On the school board, I saw first-hand the outrageous demands a state can place on local school districts through unfunded mandates and unrealistic expectations. Running a school district is not cheap, and voters usually have little idea how much direct control a local Board of Education has on its own budget. The lack of local control is depressing, actually. And try as you might to explain that a local budget crisis is Albany’s fault, no one cares—because they can’t yell at anyone in Albany but they sure as hell can yell at you. It doesn’t make them feel any better, and it sure as hell doesn’t faze the people who can do anything about it—the people in Albany—but they yell anyway.

For lawmakers in New York, at least, politics is little more than a game where the objective is to screw your opponents as badly as you can. Few people are actually interested in governance. Lawmakers spend money they don’t have so they can keep their constituents happy and keep themselves in office—while screwing over their opponents’ constituents, who are powerless to do anything to affect any sort of change.

That kind of moral bankruptcy has led to the brink of financial bankruptcy: New York’s budget gap has stretched to a whopping $10 billion.

California, Illinois, New Jersey, Texas, and a handful of other states face similar budget crises. They face friggin’ bankruptcy. Forty-four states and the District of Columbia face a shortfall of some sort.

No wonder other states, like Virginia, whose state budgets are in comparatively good health, are pushing for that bankruptcy option for their embattled cousins. Better to shift the burden of financial exigency onto creditors than onto taxpayers, particularly if federal tax dollars were to get involved. In that case, Virginia taxpayers would end up bailing out New York lawmakers. I can’t envision a situation where that would engender much love across the Mason-Dixon Line.

Is there a simple solution? No. But the longer lawmakers put off the hard choices, the harder it’s going to be to find any kind of solution at all.

2 replies »

  1. I think we see the beginning of the end. Politicians will never do the right thing. On an unrelated note, how is your book on Civil War battlefields coming along? I went to Gettysburg for the first time last September. I never fully grasped the term “Holy Ground” until then. The spirits are thick in that place.