One of the first orders of business in the next Republican-controlled House of Representatives will be the demand for bailouts of states that have been especially profligate: California, New York, Michigan, Illinois, and Connecticut. Throughout 2009 and 2010, these states stayed above water with repeated infusions of federal cash. These one-shot stimulus payments must be repeated each year. They are all non-recurring expenditures requiring separate annual appropriations.
The Republican House must say no and hold the line, stopping this raid on the federal Treasury. The cry in the caucus must ring loud: “No More Bailouts.”
But, as the Republicans demand fiscal discipline and refuse to make the citizens of other, more responsible states subsidize California and New York’s wayward finances, we need to focus on the union power that has forced states, localities, and school boards to raise taxes, borrow money, and — ultimately — depend on federal bailouts.
These unions have forced contracts on their states, localities, and school boards which provide for ever higher wages, benefits, and pensions. Even now, teachers are on strike in a suburb of Pittsburgh because they feel a 4.5 percent annual wage increase is inadequate.
The House must create a federal bankruptcy procedure for states that cannot make ends meet requiring — as in corporate bankruptcies — that state governments abrogate all their union contracts. The new state bankruptcy procedure should offer all states — and through them, their localities, counties, and school boards — the ability to reorganize their finances free of the demands of their union agreements.
This measure will return our state and local governments to the sovereignty of the people and take them away from the “thugocracy” of public-employee unions.
When states such as California and New York come to Washington begging for relief, they will threaten us with the closure of their schools and the release of their prison inmates if we deny them subsidies. Liberals and President Obama will try to portray the battle as schoolchildren versus niggardly Republican legislators.
But the real fight will be between schoolchildren and citizens on the one hand and unions on the other. The House must shape the issue so that it exposes the real cause of the state shortfalls: The excessive agreements public employee unions have won over the years.
The unions are about to fall prey to what Margaret Thatcher identified as the terminal drawback of socialism: Eventually, you run out of other people’s money.
Such an approach will also have a larger political impact.