Sunday, January 23, 2011

The Right Wing Plot to Destroy Public Pensions

If things go according to the right wing's plans, the Federal Government that bailed out Wall Street millionaires and billionaires won't help out state governments, in the process destroying public pensions and making public worker unions politically impotent. This is the plan according to of James Pethokoukis of Reuters, who declares: "This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011."
Pethokoukis reports that "the most intriguing aspect of President Barack Obama’s tax deal with Republicans is what the compromise fails to include — a provision to continue the Build America Bonds program. BABs now account for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31. And my Reuters colleagues report that a GOP congressional aide said Republicans 'have a very firm line on BABS — we are not going to allow them to be included.'"

Without low-interest bonds, states suffering the squeeze from the economic downturn may be forced into bankruptcy, a scenario that delights many in the GOP. As The Weekly Standard notes with approval, "The bankruptcy law should give debtor states even more power to rewrite union contracts, if the court approves. Interestingly, it is easier to renegotiate a burdensome union contract in municipal bankruptcy than in a corporate bankruptcy." Pethokoukis summarizes: "From the Republican perspective, the fiscal crisis on the state level provides a golden opportunity to defund a key Democratic interest group. For the GOP, it’s an economic and political win."

There are some legitimate issues on the fiscal soundness of current pensions for public workers. You don't have to be a right-wing charlatan or a Wall Street asshole to admit that. (Although it doesn't hurt if you are.) But the supposed solution here is politically cynical and may be as economically damaging to the public as the "Fuck You!" attitude to subprime loan victims has been.

Secret GOP plan: Push states to declare bankruptcy and smash unions
James Pethokoukis
Dec 7, 2010

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