State of Illinois: Severely cut spending, go bankrupt, or both (Part 1)

The new year has brought some good headlines despite the bad. For example, there’s this one (along with the sub-headline and opening paragraph):

Gingrich seeks bill allowing state bankruptcy to avert bailouts

Move afoot to help states escape benefit obligations

“Former House Speaker and possible GOP presidential contender Newt Gingrich is pushing for federal legislation giving financially strapped states the right to file for bankruptcy and renege on pension and other benefit promises made to state employees.”

Governors, state legislators, and of course, all those union-backed school board members around Illinois have created an enormous mess that not only isn’t sustainable, it’s immoral. As this column has been saying for a long time, there is only one honest way to deal with government over-spending and over-promising.

Bankruptcy is the only course that makes fiscal and common sense. An increasing numbers of analysts, commentators, and experts are starting to come to the same conclusion. This article by Lurita Doan posted just yesterday on

Next on The GOP Agenda–Dealing With Bankrupt Cities and States

Doan writes that Fed Chief Ben Bernanke “took the unusual step of warning cash-strapped municipalities and states they cannot depend upon the Federal Reserve to bail them out.”

“I’d bet that Democrat mayors and legislators for near-bankrupt states, such as California, Illinois and Michigan paid little attention to Bernanke’s warning, believing that the old game of bailouts is still afoot. They have not yet accepted that the cupboard is bare, both of taxpayer funding and taxpayer tolerance of bad fiscal decisions. More to the point, they doubt Republicans mean what they say and hope that Republicans blink when confronted with the problem.

What Democrats will seek, and what Republicans must now prevent, is a huge transfer of national wealth and taxes from those States that have been prudent, limiting government growth, rejecting the pernicious demands of state employees and unionized teachers, and fostered a pro-growth economy by limiting taxes and unwise regulation.”

Well said! She adds:

“Does anyone really think that the Tea Party, that mobilized so effectively during the last election, will now abandon those principles and support the transfer of wealth and tax dollars to bailout the most irresponsible states and municipalities?”

Up next: Part 2.