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Avoiding Big-State Tyranny

I suppose we can thank COVID-19 for reminding us why we have safeguards such as the U.S. Senate and the Electoral College to defend us against the tyranny of too-big-to-fail states.

Anytime the federal government steps in to rescue the economy, there are complaints that big banks, car companies, airlines and aircraft manufacturers, to name a few types of business, are getting more federal aid than they should. How come no one in Washington is concerned about Smalltown Bank but is desperate to keep Megabank International from going under?

Because Megabank is too big to fail, we’re told. Ripple effects would cause too much damage to the economy. Funny how no one takes into account the ripple effects of a few thousand small businesses closing down, isn’t it?

Congress has approved about $2.9 trillion in aid linked to COVID-19. But some politicians want more. There is talk of bailing out state pension programs for government employees.

Guess which states are deepest underwater with their pension systems. Try California, New York, Illinois, Pennsylvania, Texas, New Jersey and other big states. Because their politicians bought votes with unrealistically nice retirement benefits for local and state employees, many states’ pension systems are vastly underfunded. In just the six states cited above, the total gap is about $379 billion.

Nearly all the state pension programs are underfunded, to the tune of a total of $1.28 trillion for all 50 (West Virginia’s gap is $3.9 billion, Ohio’s is $39.7 billion). But some states have been more responsible than others. For example, West Virginia’s program is 79% funded and Ohio’s is 80%. Meanwhile, Illinois’ is just 38% covered. New Jersey’s is 36% and Pennsylvania’s is 55%.

You get the idea. Leaders in some of our states have been responsible. Others haven’t.

But it would take just $1.28 trillion to wipe out the whole state pension debt. Why not do it? We’ve already coughed up $2.9 trillion in COVID-19 aid.

That would reward irresponsible states and penalize the rest of us. Why should residents of, say, West Virginia and Ohio have to cover shares of Illinois’ debt?

Well over half the nation’s population is in just 10 states. That often translates to political clout, as in the U.S. House of Representatives, where each state’s delegation is in proportion to population. Together, the 10 big states hold a majority of votes in the House.

Back to where we started, with safeguards for smaller states: Any bailout would have to be approved by the Senate, too — which has two members for each state. There are enough senators from small, fiscally responsible states to outvote the 10 big ones’ senators.

Our nation’s founders built safeguards for small states into the Constitution. They did it with the Electoral College, too, denying the big states unchecked power to name presidents.

Big-spender politicians in California, New York, etc., don’t like the system. They’d like to change it, especially regarding the Electoral College.

But to do that, they’d have to get at least some help from less heavily populated states.

Let’s hope, then, that our U.S. senators are wise enough to stick together and keep what little protection we have against the too-big-to-fail states.

Reach Myer at: mmyer@theintelligencer.net.

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