Saturday, January 22, 2011

Malloy, Blumenthal Rule Out Declaration Of Bankruptcy

Both Connecticut's new governor, Dannel Malloy, and its new U.S. Senator, Dick Blumenthal, have put the kabosh on the possibility of bankruptcy for the state as a means of settling its deepening debts, according to Mark Davis of News Channel 8.

Mr. Blumenthal, no longer loking for someone to sue since he moved from the attorney’s general office, said "States really need to cut spending and put their fiscal houses in order without resorting to mass insolvency.”

Governor Malloy, who previously has acknowledged that Connecticut’s per capita is worse than California’s, agreeed with Mr. Blumenthal.

"Connecticut,” the governor said, “is looking to embrace, not to escape the responsibilities of sound financial management. We will honor our obligations and do not intend to support proposals that would enable states to avail themselves of bankruptcy."

Should a state declare bankruptcy, its financial obligations fallinto the hands if judges who are able to order changes in payment schedules and union contracts. Mr. Malloy has not yet said that he would be willing or able to do the same as the state marches towards bankruptcy.

"It would sort of shift the decision making from the legislature to the judicial branch, and you'd have the judicial branch overseeing the state's budget, so it certainly is a real drastic measure," said Rep. Vince Candelora, a Republican.

Mr. Davis quoted “as one person close to the leadership” as having said “We have a whole lot of agita about this, it's a political minefield."

2 comments:

David said...

It will be interesting to see how Gov. Malloy's attempts to reconcile his "centrist" image with a union dominated Democratic party. I'm not sure helpful media coverage will be enough. Since the mayor of New Haven has touched the third rail of municipal union contract lunacy, I think if Malloy doesn't do something serious on pensions etc. he will look ineffective.

Don Pesci said...

David,

Mr. Malloy will look ineffective in SOME eyes; whether they will be the right eyes is still a mystery. But it may not matter. At some point, events begin to direct policy. That’s coming down the pike, and it won’t be long before “it’ll soon be here” – the bone crushing “tomorrow” of former President Bill Clinton’s signature song.

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