By DICK MORRIS & EILEEN MCGANN
Published in the New York Post on August 10, 2010
Federal Band-Aids won't cover the fiscal problems of such states as New York, California, Michigan and Connecticut forever. State bankruptcy and fundamental restructuring of state and local finance -- and labor relations -- is at hand.
Take Connecticut. In the current fiscal year, $2 billion in federal subsidies have helped tide it over the recession -- a hefty share of its $15 billion budget. But these infusions are one-shot grants, renewed only if Congress acts affirmatively to do so. Other states depend on similar manifestations of federal largess.
In Washington, the House is set to pass a $26 billion aid package this week -- fresh federal aid amounting to about 2 percent of state and local spending. But if the Republicans win control of Congress this fall, it is hard to see any legislative willingness to renew these subsidies.
Instead, GOP lawmakers will point to the examples of New Jersey, Virginia and Indiana -- where conservative governors have slashed spending to avoid tax hikes. In Virginia, Gov. Bob McDonnell has reduced spending to pre-2006 levels.
If Congress fails to renew its subsidies, the more profligate states will face cash shortfalls in the current fiscal year. They'll threaten school closures, prison releases and all manner of mayhem if their subsidies aren't renewed. But the Republicans in Washington are likely to refuse -- asking why the responsible states should bail out the spendthrifts in Albany, Sacramento, Lansing and Hartford.
At that point, the bond markets will start eyeing state (and local) balance sheets more critically -- demanding higher rates or even refusing to lend. California won't be the only one trying to get by on IOUs.
But beyond this tale of woe lies a golden opportunity to reform state governments and redress the imbalance of power between elected officials and public-employee unions.
Absent endless federal subsidies, states will simply no longer be able to afford to give the unions everything that they want. And governors -- many of them newly elected Republicans -- will realize that they can't even afford to honor agreements their big-spending predecessors OK'd.
The GOP Congress should then amend the federal bankruptcy law to provide for a way -- now absent -- for states to declare bankruptcy. (Municipalities can do so under current law, but states have no such relief.)
Here's the key: The reforms must require that states abrogate their public-employee union agreements in the bankruptcy process, just as private corporations like Delta and Chrysler have done. The wage hikes, the work rules, the pension plans all go out the window.
Few states will have the starch to cut benefits for those now receiving them. But most will cut pensions for current workers and all will slice them for future employees. Even the threat will be a powerful bargaining tool.
And beyond the fiscal adjustments, the power of the municipal- and public-employee unions will be broken.
Voters throughout America will loudly applaud if Congress tells the profligate states, "Work it out on your own. Don't look to us for a bailout."
President Obama could veto the bankruptcy reforms -- but a Republican Congress need do nothing to assist states in their plight until he relents. All of the political and financial leverage will be on Congress' side.
The result could be the greatest revolution in state and local governance since public-employee unions came on the scene. The public and the voters would get their local governments back, and the grip of public unions will be weakened. It would be the state and local equivalent of President Ronald Reagan's tough stand against the air-traffic controllers' strike.
Politically, the unions that fund and fuel the Democratic Party would be emasculated, dramatically shifting the national balance of power.
Former British Prime Minister Margaret Thatcher's prediction about socialism will have come true for America's states: "Sooner or later, they run out of other peoples' money."
Go to DickMorris.com to read all of Dick's columns!
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A CONTRACT WITH AMERICA FOR 2010
By DICK MORRIS
Published on TheHill.com on August 9, 2010
My observations from the campaign trail are that this year's elections will be a total and complete disaster for the Democratic Party. In fact, it will amount to the obliteration of an entire generation of Democratic officeholders. It will become very rare to find a youngish baby boomer white Democrat in elective office in the United States. I believe that almost half of the white Democratic congressmen who are seeking reelection will lose!
A wipeout of this magnitude cannot be explained, alone, by Obama's ratings or his policies. He has fallen sharply since he took office, but even ratings in the 40s do not explain this type of result. It is increasingly obvious that Congress has earned much of this disaster by itself, quite unrelated to Obama. The vision of the deal-making that accompanied healthcare was too disgusting for the average American to stomach. And now the failure of the Congress to expel Reps. Charles Rangel (D-N.Y.) and Maxine Waters (D-Calif.) underscores its inability to police itself.
RED SKY IN THE MORNING: CIC agents thought they were communist spies. The Philippine constabulary just wanted them dead. Two men made it out alive - one didn't.
Republicans should embrace specific ethical reforms, which they should showcase in their campaign advertising in 2010. These positive ads will do as much as any good negative to underscore the difference between a Republican challenger and a Democratic incumbent.
The reforms should include:
• The establishment of an office of special prosecutor for Congress, with its head appointed by the chief justice of the U.S. Supreme Court for a fixed term. The office should have subpoena power, a well-funded staff and the right to convene grand juries and issue indictments. Self-policing by ethics committees obviously does not work.
• All earmarking should be banned. Congress cannot be trusted with this power.
• A ban on spouses of members of Congress serving on boards or accepting employment by any company or organization that receives federal funds. In cases like Mrs. Chris Dodd and Mrs. Evan Bayh, corporate board employment was a way for special interests to influence their husbands and pad the family checkbook.
• A ban on families of members of Congress serving as lobbyists.
• No free travel, whether sponsored by foundations or lobbyists. Only government trips on official business -- real business -- should be allowed.
• Full disclosure of the precise amounts of members' net worth, debts, investments and holdings, including home mortgages.
• Full publication, online, of all committee votes.
• No student loan repayments for congressional staffers.
• A five-year ban on lobbying for members of Congress or their staffs after leaving office. The ban should also apply to employment by a company that performs lobbying services.
• If a senator or congressman is absent more than 10 percent of the time for reasons other than illness -- including running for president -- his pay should be docked proportionately.
• Term limits for congressional staffers. No staff member of Congress should be permitted to serve in a job that pays above $100,000 a year for more than eight years. If we can't get term limits for Congress, let's at least clean out the professional staffers!
A smart candidate in 2010 will take elements of these proposals -- particularly the special prosecutor -- and put them in his or her campaign ads. Cashing in on Obama's unpopularity and his failed agenda is only half the battle. Capitalizing on the dismal state of congressional ethics is the other part!
RED SKY IN THE MORNING: CIC agents thought they were communist spies. The Philippine constabulary just wanted them dead. Two men made it out alive - one didn't.
Go to DickMorris.com to read all of Dick's columns!
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