From Friday's Last Word program, a good summary of what's happening in Minnesota.
What's happening in Minnesota? The Republican-controlled legislature and the Democratic governor, Mark Dayton, are in a state budget stalemate. The governor wants Minnesota millionaires to pay more taxes — something that will affect fewer than 8000 people.
The Republicans say "No way; that would mean the death of the Republic." Then they added, "But wait, maybe if you agree to gut abortion, we'll give you the death of the Republic after all."
Dayton seems to have received his injection of spinal fluid; he told the Republicans to "Go for it." So they did.
Chris Hayes, subbing for O'Donnell:
"Unrelenting maximalist budgetary brinksmanship" — exactly right. Remember, the Crisis in the States has been in the works for some time. It's not the by-product; it's the plan.
Don't believe that? James Pethokoukis at Reuters does (my emphasis):
Congressional Republicans appear to be quietly but methodically executing a plan that would a) avoid a federal bailout of spendthrift states and b) cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011.Or how about Joe Wiesenthal at Business Insider?
That’s why the most intriguing aspect of President Barack Obama’s tax deal with Republicans is what the compromise fails to include — a provision to continue the Build America Bonds program. BABs now account for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31. And my Reuters colleagues report that a GOP congressional aide said Republicans “have a very firm line on BABS — we are not going to allow them to be included.”
In short, the lack of a BAB program would make it harder for states to borrow to cover a $140 billion budgetary shortfall next year, as estimated by the Center for Budget and Policy Priorities. The long-term numbers are even scarier. Estimates of states’ unfunded liabilities to pay for retiree benefits range from $750 billion to more than $3 trillion.
Ben Bernanke is speaking in front of the Senate today, and one of the big topics during the Q&A session is the state of muni finances.I could cite more. These are insiders, people with connections, writing in publications that don't make it to Morning Joe — they can write freely because their stuff is safely not-news.
The Fed Chairman doesn't expect any state to default, but he also says he doesn't believe it's within his mandate to bail out the states (e.g. by buying muni debate) should it come to that.
The Senators keep hammering on this point, and there's a reason for it. The GOP is hoping for states to collapse, and they want to be absolutely sure nothing gets in the way of that.
But they know. From Business Insider again, here's a list of the states with the worst deficits. Minnesota is 7th. And be sure to note the chart at the bottom.
I'll say again: The Crisis is the plan. Any 8th-dimensional genius negotiator on the other side of that table needs to get that fact — and act like he gets it.
If not, we'll have to do as Sally Kohn recommends: "Donate Spinal Fluid to Dems." Looks like Mark Dayton got his dose.
Happy 4th.
GP
