For decades, local and state politicians in places like New Jersey, New York and elsewhere, have mismanaged their taxpayers’ money. Now, they want a bailout. Without serious and lasting reform, they should be denied.
New Jersey will soon be facing a fiscal crunch that, due to the state’s mandatory ‘stay at home’ order—which is now extended “indefintely“—is becoming dire.
On Monday, New Jersey’s current governor, Democrat Phil Murphy, went on CNBC’s Squawk Box and stated that, without federal assistance, “New Jersey could be headed toward an ‘Armageddon’ scenario, with an inability to fund public schools and police, if it doesn’t receive more federal assistance due to the coronavirus pandemic.”
Just say ‘NO.’
While one can empathize with a state like New Jersey, as well as other financially-burdened states, New Jersey’s calamitous-financial mess has been around much, much longer than the coronavirus.
In fact, during the height of the economic boom that was just last year, New Jersey was $239 billion in debt.
In a nutshell, in addition to granting their government unions more lucrative deals, “New Jersey governors and lawmakers for decades contributed less than the amount recommended by actuaries or nothing at all.”
For politicians, every time they have tried to cut back on the state’s spending, they’ve been met with protests from the government unions.
So, rather than anger their unions, New Jersey pols have raised taxes over and over again through property tax increases and so-called progressive “tax the rich” schemes.
In fact, New Jersey is so dependent on its high tax rates that, in 2016, when billionaire David Tepper—a long-time New Jersey resident—moved he, his family, and his business out of New Jersey to Florida, the state that it had to redo its entire state budget.
“If you’re making hundreds of millions of dollars and you’re paying close to 10 percent to the state of New Jersey, you do the math,” said Jon Bramnick, the Republican leader in the New Jersey Assembly told the New York Times in 2016. “You can save millions a year by moving to Florida. How can you blame him?”
In 2018, “thousands” of millionaires left the state of New Jersey, reported NorthJersey.com
If financial malfeasance weren’t enough of a reason to discourage the use of federal funds to bail out New Jersey (and states like it), here’s another reason:
Last week, New Jersey’ Murphy stated that he is open to paying illegal immigrants $600-a-week despite state ‘running out of money’.
As New Jersey and other cash-strapped states look toward the federal government to bail them out, one approach to address their needs has been for individual states to file bankruptcy.
“Yeah, I would certainly be in favor of allowing states to use the bankruptcy route,” Sen. Majority Leader Mitch McConnell [R-KY] told radio host Hugh Hewitt last week.
“It saves some cities. And there’s no good reason for it not to be available,” McConnell stated. “My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that. That’s not something I’m going to be in favor of.”
McConnell’s statements were condemned as “outrageous” and “irresponsible” by several governors, including Murphy, on Sunday.
While the thought of a state filing for bankruptcy is less than appealing, it could allow fiscally-irresponsible states like New Jersey to re-engotiate their debt–including debts owed to government worker pensions.
And, although he has not specifically weighed in on the ‘bankruptcy’ topic yet, President Trump did seem to hint at it in a tweet on Monday.
“Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help?,” the President tweeted.
Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help? I am open to discussing anything, but just asking?
— Donald J. Trump (@realDonaldTrump) April 27, 2020