Instead, it is a safe bet that at the 11th hour, when the threat of municipal and state bond defaults is imminent, California will come to the federal government and seek a bailout of almost $1 trillion. After all, this ploy worked before, as much of the Obama stimulus money went to support those states that have been most fiscally irresponsible.Will a new GOP-led Congress make the same mistake and backstop irresponsible states and municipalities who are simply unwilling to balance their books, and make the necessary cuts to long-cherished, ineffective programs that cannot be sustained? That great question will dominate the national debate over the next year.
Fed Chief Ben Bernanke thinks so too, which is why he took the unusual step of warning cash-strapped municipalities and states they cannot depend up the Federal Reserve to bail them out. I'd bet that Democrat mayors and legislators for near-bankrupt states, such as California, Illinois and Michigan paid little attention to Bernanke’s warning, believing that the old game of bailouts is still afoot. They have not yet accepted that the cupboard is bare, both of taxpayer funding and taxpayer tolerance of bad fiscal decisions. More to the point, they doubt Republicans mean what they say and hope that Republicans blink when confronted with the problem.
What Democrats will seek, and what Republicans must now prevent, is a huge transfer of national wealth and taxes from those States that have been prudent, limiting government growth, rejecting the pernicious demands of state employees and unionized teachers, and fostered a pro-growth economy by limiting taxes and unwise regulation.
Why should states such as Texas, Alaska, North Carolina and Virginia be forced to pay for the sins of California, Michigan, and Illinois? Remember: the original Rick Santelli rant that gave birth to the Tea Parties epitomized the growing discontent of an increasing number of American taxpayers who objected to individual wealth transfers from those who have been frugal to those who were spendthrift, buying houses they could not afford. This increasingly vocal population of discontented working Americans is one of the major forces that overturned the Democrat-led House of Representatives. And, they haven't gone away just because the election is over.
Does anyone really think that the Tea Party, that mobilized so effectively during the last election, will now abandon those principles and support the transfer of wealth and tax dollars to bailout the most irresponsible states and municipalities?
The House, and the Senate of the 112th Congress should signal the new resolve in Washington to limit spending and echo Bernanke's statement that there will be no federal aid for state and local governments operating in the red.
Under GOP leadership, the House could go even further and issue a "Sense of the House" resolution making it clear that no additional "stimulus" or "bailout" funding will be forthcoming, and that municipalities need to make cuts and get their budgets balanced.
Now is not the time for the GOP-led House to be squeamish. All Americans are watching them to see if their actions will mirror their election campaign promises. One thing's for sure, legislators need to read the writing on the wall of American taxpayer discontent, because if they don't, come 2012 …