The main goal this time will be to bail out state governments, especially those run by Democrats and their allies in public unions.
Public retirees in the state still get annual compounded pension cost-of-living raises of 3%. Keep in mind that Congress's $2.2 trillion Cares Act last month included a $150 billion blank check to states plus $90 billion for schools, public transit and Medicaid.
Illinois received $3.52 billion, or 8.8% of its general-fund revenue, while Michigan also made it big with $3.1 billion, or 27%. The economic shutdowns will cause budget pain in states and cities.
States with healthy finances going into the pandemic should be able to endure revenue declines for a few months thanks to the Cares Act.
The Federal Reserve has also set up a $500 billion facility to buy short-term debt from states and large municipalities, which will help cover operating costs with little disruption as citizens delay income-tax payments and spend less.
The Fed shouldn't rescue states and cities by buying longer-dated securities such as bonds that Illinois floated during the last two recessions to backfill its pensions.
Bailout conditions should include cuts in nonessential spending, immediate and permanent reductions in public pension benefits, and other reforms to put states on a path to fiscal recovery.
https://www.wsj.com/articles/bail-out-the-states-11587597191?mod=hp_opin_pos_1
Public retirees in the state still get annual compounded pension cost-of-living raises of 3%. Keep in mind that Congress's $2.2 trillion Cares Act last month included a $150 billion blank check to states plus $90 billion for schools, public transit and Medicaid.
Illinois received $3.52 billion, or 8.8% of its general-fund revenue, while Michigan also made it big with $3.1 billion, or 27%. The economic shutdowns will cause budget pain in states and cities.
States with healthy finances going into the pandemic should be able to endure revenue declines for a few months thanks to the Cares Act.
The Federal Reserve has also set up a $500 billion facility to buy short-term debt from states and large municipalities, which will help cover operating costs with little disruption as citizens delay income-tax payments and spend less.
The Fed shouldn't rescue states and cities by buying longer-dated securities such as bonds that Illinois floated during the last two recessions to backfill its pensions.
Bailout conditions should include cuts in nonessential spending, immediate and permanent reductions in public pension benefits, and other reforms to put states on a path to fiscal recovery.
https://www.wsj.com/articles/bail-out-the-states-11587597191?mod=hp_opin_pos_1
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