History Will Begin to be Made this Week

This is very likely going to be a memorable week in the history of self-government and public finance.
In addition to the Federal debt-ceiling issue which needs to be resolved by Tuesday in order for the Federal government to be able to keep paying everything it owes without resorting to various less-than-scrupulous financial gimmicks, the receiver for Central Falls may make an announcement as early as tomorrow that he is filing for bankruptcy. As Philip Marcelo wrote in today’s Projo

The square-mile city would be entering uncharted waters as federal municipal bankruptcy has been rarely tested nationally.
Central Falls is not sui generis; it is an advanced case of a situation faced by many cities and towns across the United States, and what happens with CF is going to contribute very visibly to a body of legal, policy and political knowledge about what to do and/or what to avoid when twenty-first century communities run out of money needed to pay for decisions made over preceding decades.
But the most important thing to keep in mind is that nothing ends this week. The reckoning (to use Matt Allen’s word) of the fiscal crisis created by the political and social changes of the past 45 to 80 years, depending upon if you want to place the beginning of the problem with the New Deal or the Great Society or somewhere in between, is just beginning and what our society will look like as a result, for better or for worse, will be decided more by the reaction to this week’s decisions than by the decisions themselves.
Finally, one symptom visible in Central Falls of the problem that is nationwide is captured beautifully by the quote from freshman state Rep. James McLaughlin in the Projo’s CF story…
“They’re going to file for bankruptcy,” said state Rep. James N. McLaughlin, a Democrat who represents a portion of the city and is opposed to [filing for bankruptcy]. “All avenues have not been exhausted. It is a rush because they do not have any money.”
If our politics keeps producing a large number of elected officials who believe that just because we have no money doesn’t mean we’re bankrupt, we’re basically doomed.

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Monique
Editor
10 years ago

“All avenues have not been exhausted. It is a rush because they do not have any money.”
Sir? Could you list those other avenues, please?

Dan
Dan
10 years ago

Oh, I can easily list them, right out of the progressive playbook:
-State bailout
-Federal bailout
-Raise taxes on the “rich” 1000%
etc.

Max Diesel
Max Diesel
10 years ago

The prize goes to Dan. I can’t imagine Chafee and/or the Dems (most times they’re indistinguishable) letting CF go down the tubes. Time will tell.

Patrick
Patrick
10 years ago

McLaughlin ain’t the brightest bulb up there at the State House.
I still think the best option is to have CF simply dissolve into Pawtucket, Cumberland and Lincoln. Eliminate all services the city offers and have the state continue paying the aid it has been paying to CF to its new towns, and phase it out over 10 years. The city is one square mile. Break that up into thirds and it really isn’t that much for each town to absorb.

Monique
Editor
10 years ago

“-State bailout”
Nope. The G.A. already wisely refused.
“-Federal bailout”
Nope. Congress, even including Democrats, signaled several months ago that that ain’t happening.
“-Raise taxes on the “rich” 1000%”
Well, now you’re talking. Any way we can rope in some eeeeevil corporations at the same time …?

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