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Tipton Supports Bankruptcy for Failed States

by | 8:24 am, February 1, 2011 | 1 Comment

At a meeting in Alamosa with county commissioners and health care professionals, Representative Scott Tipton announced his support for allowing states to declare bankruptcy.

Conejos County Commissioner John Sandoval asked Tipton for his view of states declaring bankruptcy to get out of debt.

"Yes, I’m in support of that," Tipton said. "Colorado is OK because their budget has to be balanced. But someplace like California, I don’t know how else they can get out from under where they are."

All bankruptcy does is let states like California and New York off the hook for their decades of failed fiscal policy. Those states won't change until they have no other choice and even then, there will be those who will resist.

The rest of the meeting, judging from the Courier story, was another beg fest just like the one with Senator Mark Udall a couple of weeks ago. Cities are already whining about the lack of pork coming from Washington. What worries me is this attitude from Tipton paraphrased by the Courier.

Tipton said help to home constituents would be more limited than in the past because President Barack Obama has pledged to veto any bills with earmarks.

Oh, I'm more than willing to send earmarks your way but, drat it all, that mean ol' President has promised to veto all earmarks. Tipton, new as he is, should know that Obama hasn't seen a spending bill he doesn't like. Oh, and which party was it that banned earmarks by it's members? Oh, right, it was Tipton's own Republican party.

This is why the Tea Party will not go away. We have to keep an eye on everyone, even those who claim to be fiscal conservatives. If we don't they'll spend away even while telling us how desperate our fiscal situation is. Come on, Scott. You're better than that.

Category: Colorado, Colorado Politics, Politics, PPC, tea party
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Comments

  1.   Chris Maj
      February 1st, 2011 @ 10:41 am

    State bankruptcies would likely cause future buyers of government debt to insist on a higher rate of return in order to compensate for the increased risk of not getting one’s money back. That’s a good thing. Higher interest rates limit the proclivity of state government to saddle children with bond-bills that must be paid by way of increased taxation on their future production.

    Although not a truly free market scenario – owing to the forced labor of the people that the government preys upon for payments to the bond holders – the growth of the penniless state would be curtailed for quite a while after declaring bankruptcy due to the overwhelming impact of market forces at new bond auctions.

    I would echo Frank Chodorov and say “don’t buy government bonds,” but what even those who support government incurred debt must consider unfortunate is that the prices and parameters of the government bond market are largely, as of late, fixed by the central bank; therefore, reasonable price corrections are not being allowed to occur. It is the raw force of government action, via the Fed printing money out of thin air to directly monetize the debt, which works to counter these corrections in bond prices (interest rates.)

    For example, and to tie back in a little to the OP, the Fed is effectively papering over the damn breaks in states like CA, IL, NY, and heck even CO (unemployment fund bailout) so it is hard to see how truly bankrupt many states are. Obscurity: it’s what the central bank is designed to do!

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