Santorum: Don’t Bail Out California—Or Any Other State
Wednesday, February 02, 2011
By Terence P. Jeffrey
cnsnews.com
(CNSNews.com) - Former Sen. Rick Santorum (R.-Pa.), who says he is considering a run for the Republican presidential nomination, told CNSNews.com that the Republican-controlled House of Representatives should not approve a bailout for California or any other state.
"You can’t bailout one," Santorum told CNSNews.com's "Online With Terry Jeffrey." "If you bailout one, then Katie bar the door. Every state with a deficit is going to come for money of which we don't have."
Last fall, California’s Legislative Analyst’s Office said that the state faced annual budget deficits of about $20 billion per year for each of the next five years. Many other states face similar fiscal problems, driven by Medicaid costs and the pay and pension packages of state employees.
Santorum told CNSNews.com that both states and cities should be made to deal with their own fiscal problems locally and not be given federal bailouts.
“One of the things that I would insist upon, hopefully for this Congress, is no bailouts of the states, no bail outs for these municipalities,” said Santorum.
Santorum said even a Republican-controlled House might be tempted to bailout California because some Republicans from the state will argue for it and others will say that if you do not bailout California, with its huge economy, there will be a ripple effect that damages the entire national economy.
“The big argument will be that if California goes bankrupt the economy will tank, it will have the ripple effect,” said Santorum, noting that the argument for a California bailout will be like “TARP all over again.” TARP—the Troubled Asset Relief Program—was the $700-billion legislation signed by President George W. Bush in October 2008 to bailout insolvent banks.
Santorum said that advocates of bailing out California will say: “You've got to bail them out. … It’s too big to fail. Have we heard this before? Well, is there any state that's too big to fail more than California? And, of course, even Republicans from California will say: Well, you've got to be for this, right? Republicans are going to be screaming that you can't let our state fail. So, there will be enormous pressure for California because of its huge impact.
“But, then, of course, if you bail out California, well, then why not New York? And why not everybody else?” said Santorum.
When asked if he thought there was any possibility that a Republican-controlled House led by Speaker John Boehner (R.-Ohio) would bailout a state government, Santorum said: “I certainly hope not. But, look, I've seen a lot of bad things happen in Washington, D.C. with people who say they are conservatives.”
Here is a transcript of the segment in "Online With Terry Jeffrey" where former Sen. Rick Santorum stated his opposition to bailing out state governments:
CNSNews.com Editor in Chief Terry Jeffrey: So the second thing the next president needs to do--after he repeals Obamacare-- is through Medicaid reform that gives it back to the states and gets rid of the federal entitlement, let the states deal with block grants from the government. What the third problem?
Former Sen. Rick Santorum (R.-Pa.): Well, I'd also move--one aside, on sticking with the states, and that is dealing with this issue of federal employees, excuse me, state employees, municipal employees. That bill is coming due. You have huge pension obligations, huge health-care obligations for retirees in municipal governments and state governments. One of the things that I would insist upon, hopefully for this Congress, is no bailouts of the states, no bail outs for these municipalities. And the federal government is going to be facing the same thing. I mean we’re going to be facing the same situation where we've overpromised.
There are—I shouldn’t say none, there are some union plans left--there are very few defined benefit plans left in the private sector. Everyone has their 401K, the company says: Here's money, you can invest it for your retirement. But they’re not sticking the company with an obligation to pay you a certain amount of money in a pension for the future. The federal government needs to move in that direction. That's another reform that we need to do. It’s a longer term issue, but it’s an important one that we need to do.
Jeffrey: Do you think there is a realistic possibility that a House of Representatives led by John Boehner would actually approve a bailout of a state?
Santorum: I certainly hope not. But, look, I've seen a lot of bad things happen in Washington, D.C. with people who say they are conservatives. So, I’m hopeful that the pressure won't come that California goes bankrupt. You will hear these. You see this all the time. Well, if California goes bankrupt, you know experts say--
Jeffrey: And they will say that in part Medicaid, a federal program, is at fault.
Santorum: Well, they will say Medicaid is at fault, but, look, there’s all sorts of reasons that California is going bankrupt. But they will come and the big argument will be that if California goes bankrupt the economy will tank, it will have the ripple effect. You'll see all these, and it’s TARP all over again. You've got to bail them out. We can’t--it’s too big to fail. Have we heard this before? Well, is there any state that's too big to fail more than California? And, of course, even Republicans from California will say: Well, you've got to be for this, right? Republicans are going to be screaming that you can't let our state fail. So, there will be enormous pressure for California because of its huge impact. But, then, of course, if you bail out California, well, then why not New York? And why not everybody else?
Jeffrey: Well, and of course California was partially bailed out as some other states were by the stimulus.
Santorum: By the stimulus package. And that’s going to be an area where if the Senate, excuse me, if the House Republicans are serious about getting this deficit under control, the first thing they should do is pull back as many of those funds as they possibly can right now.
Jeffrey: That haven't been spent.
Santorum: Right, that haven't been spent right now.
Jeffrey: All right. So you say if California is going down that’s Jerry Brown and the legislature in Sacramento, they can deal with it. The federal Congress and taxpayers in Pennsylvania or Ohio, they should not have to pay for the California government?
Santorum: They have their own problems. Pennsylvania and Ohio have huge deficits too that they are going to have to deal with. And to bailout California and not Pennsylvania--how is that fair to the people of Pennsylvania? It’s not fair and that's what I am saying. You can’t bailout one. If you bailout one, then Katie bar the door. Every state with a deficit is going to come for money of which we don't have.
So, I'm hopeful that even California Republicans will stand up and say this is just simply not the right thing to do and we have to take tough medicine. And the tough medicine means you have to cut back on your Medicaid programs, you’re going to have to cut back on your obligations to your public employees and those two things by and large will solve a big nut of the problem. |
