To Members of Congress:
"Congressional Republicans on Tuesday sought to put President Barack Obama on the defensive ahead of his State of the Union speech as they pressed their plans to slash domestic spending."
Republicans aren't going to bailout States, but Cantor in the House says State bankruptcy will face an uphill battle and "analysts -- and states themselves -- are concerned that opening up a bankruptcy option would spook the buyers of state debt, driving up interest rates and making borrowing more expensive."
Except the cat is out of the bag, because of above linked article and Bob Brinker, Long-time Radio Financial Adviser has recommended, "The six that really jump out for me would be Arizona, California, Illinois, Louisiana, New York and New Jersey.... I would not purchase their municipal securities.....that's just my opinion."
Democrats in House and Senate must help States in trouble to force bondholders to share the burdens of fiscal excesses, since they too profited via said bonds in the excess debt.
Someone needs to get the bankruptcy ball rolling; so here goes.
A Primer for a State's Bankruptcy:
Why? New York will go bankrupt because Cuomo is not acting to easily correct $28 Billion dollars Medicaid excesses in NY compared with others States (California). His proposals to dismiss 12,000 State employees might account for (assuming a $100,000 per employee yearly income plus benefits) $100,000 x 12,000 = $1.2 billion dollars saved. That's $1.2 billion out of the $10 billion he claims is the budget deficit now for the coming year. And Cuomo will add that to the measly 0.6% of Medicaid excesses Cuomo recovered. So, Cuomo runs out of cash. But, he's not alone, several governors will join him. They need a cover, who'll the stiff the State bondholders and redo employee contractual benefits and pay. It's not me (your beloved Elected Governor), it's the bankruptcy judge.
Is it Constitutional? Yes, because the law proposed below was only modified by replacing a State's municipality with the State. "The first municipal bankruptcy legislation was enacted in 1934. ..., the Supreme Court held the 1934 Act unconstitutional as an improper interference with the sovereignty of the states. Ashton v. Cameron County Water Improvement District No. 1, [Then] Congress enacted a revised Municipal Bankruptcy Act in 1937, ... which was upheld by the Supreme Court. United States v. Bekins."
How? The proposed chapter 10 for States has identically to the existing constitutional Chapter 9 no provision for the sale of assets, nor for such to be given to creditors. Just as in Chapter 9, the bankruptcy court cannot actively mange the State's affairs, and can only approve a reorganization plan submitted by the State. And as in Chapter 9,; the State can use the bankruptcy court to enforce court orders and preclude any connected litigation elsewhere and change contractual agreements.
Details? In the proposed Chapter 10:
1. The bankruptcy judge is assigned by the Chief Federal Judge of the State;
2. A list of all creditors can be filed after filing bankruptcy petition;
3. Automatic stays of all collections against the State can be stayed; the court can fix time and manner of the filing of all claims against the State;
4. Only the State and not creditors, nor someone appointed by the bankruptcy court can propose a settlement;
5. The State retains its powers to use its property, raise taxes, and make expenditures and change non-debt contractual relationships;
6. The State can reject collective bargaining agreements and retiree benefit plans;
7. Interested parties may be heard, but no one but the State can file a PLAN for resolution of the debts and obligations.
Proposed Chapter 10:
I've copied sections of the Federal Bankruptcy law for Chapter 9 and would remove text in blue and insert the red text. Other parts of this Chapter 9 would remain unchanged and be renumbered from §§
TITLE 11 CHAPTER
CHAPTER
SUBCHAPTER I—GENERAL PROVISIONS (§§
SUBCHAPTER II—ADMINISTRATION (§§
SUBCHAPTER III—THE PLAN (§§
This chapter does not limit or impair the power of a State to control, by legislation or otherwise,
Notwithstanding any power of the court, unless the debtor consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with—any of the political or governmental powers of the debtor State; the debtor’s use or enjoyment of any income-producing property; the sovereign immunity of such debtor State.
(b)The chief judge of the court of appeals for the circuit embracing the
If the petition is not dismissed under subsection (c) of this section, the court shall order relief under this chapter notwithstanding section (b)The court may not, on account of an appeal from an order for relief, delay any proceeding under this chapter in the case in which the appeal is being taken; nor shall any court order a stay of such proceeding pending such appeal. The reversal on appeal of a finding of jurisdiction does not affect the validity of any debt incurred that is authorized by the court under section (c)or (d)
The holder of a claim payable solely from special revenues of the
Sincerely yours, CuomoTARP.blogspot.com. [please access web site for working links not seen in Faxes]
By Fax to Chairman and ranking Minority Member of Senate and House Judiciary Committees and the Senate Subcommittee on Administrative Oversight and the Courts and the House Subcommittee on Courts, Commercial and Administrative Law
Patrick Leahy (D-VT); Jeff Sessions (R-AL)
Lamar Smith (R-TX); John Conyers, Jr. (D-MI)
Sheldon Whitehouse (D-RI); Howard Coble (R-NC)
