4 ms·

Illinois is bankrupt, and the worst thing that you can do when you are bankrupt is pretend that you aren't. If I were a resident of the state I would strongly c

by pg_bot 9y ago

Illinois is bankrupt, and the worst thing that you can do when you are bankrupt is pretend that you aren't. If I were a resident of the state I would strongly consider moving somewhere else as your taxes are going to explode, and services will likely be cut. The tax base is already shrinking which will cause a negative feedback loop destroying property values and new business formation.

dragonwriter 9y ago
> Illinois is bankrupt No, it's not. Bankruptcy is a legal state, and one which is not open to US states. It's not even insolvent, which “bankrupt” is often incorrectly used as a synonym for. It may have a projected future insolvency, but that's a different issue.
- rayiner 9y ago
  Insolvency means your liabilities exceed your assets, or you can’t pay your debt as it comes due. If you’re a state like Illinois that has a constitutional restriction on reducing future pension obligations through a change in the law, then you’re cooking the books if you don’t count them as liabilities. And if you do, Illinois is almost certainly insolvent under the first definition. And since it’s not able to pay its bills in due course, it’s probably insolvent under the second definition too.
  - runwerks 9y ago
    isn't the US then the same by your reasoning? we should flee the US as well.
    - cletus 9y ago
      The US is not bankrupt or insolvent: https://en.wikipedia.org/wiki/Financial_position_of_the_United_States https://en.wikipedia.org/wiki/Financial_position_of_the_Unit...
    - ww520 9y ago
      US Federal debt is in USD term so it can always repay its debt with printed USD. Technically it is not insolvent.
    - j4ship 9y ago
      the down votes of truth .... hn is a cult
    - apike 9y ago
      The US can always pay its debt because it is denominated in US dollars - it can print sufficient US dollars to meet its debt obligations. States do not have this ability.
    - hackeraccount 9y ago
      It might be if it had a constitutional amendment saying Medicaid, Medicare and/or Social Security were untouchable. It doesn't. There's no spending in the US that's not on the table. When or if push came to shove it's not hard to imagine some or all of those programs being cut just as it's not hard to imagine taxes going up.
  - dragonwriter 9y ago
    > Insolvency means your liabilities exceed your assets, or you can’t pay your debt as it comes due. If you’re a state like Illinois that has a constitutional restriction on reducing future pension obligations through a change in the law, then you’re cooking the books if you don’t count them as liabilities. And if you do, Illinois is almost certainly insolvent under the first definition. You seem to be discounting assets, like taxation power (now, the politicsl consensus necessary for the state to use that power may not exist, but that's unwillingness to use an asset, not lack of assets.)
    - JumpCrisscross 9y ago
      > that's unwillingness to use an asset, not lack of assets That’s like marking at 100 a bond trading at 30 while arguing the problem isn’t the asset, it’s buyers’ unwillingness to pay the right price. In any case, potential to raise taxes is like potential to raise prices. It isn’t an asset until it’s signed and producing.
      - vostok 9y ago
        That's when you say that it's held-to-maturity and claim that it's not impaired.
    - masonic 9y ago
      assets, like taxation power Now we go straight from a misdefinition of "bankruptcy" to outright fabrication of "asset". Each of us may have earning power, for example, but that doesn't make it an asset we can legitimately put on a balance sheet. And taxation power is constrained by the US and IL Constitutions and even US and IL law.
  - gamblor956 9y ago
    Insolvency is a legal term meaning that one cannot pay their debts when due (see the UCC). Illinois can currently pay its debts as they come due, so it is currently solvent. It is likely to become insolvent in the future, but that is not the current state.
    - wombatpm 9y ago
      Actually they can't. They currently have somewhere north of 5 billion in unpaid invoices. Their slow payment on contracts have driven some organizations into bankruptcy themselves. Many small business owners I know now refuse to do business with the state because thay can't wait years to be paid.
      - dragonwriter 9y ago
        > Actually they can't. They currently have somewhere north of 5 billion in unpaid invoices. There's a difference between not having the money to pay debts as they come due (which is insolvency) and just paying late by choice, incompetence, or -- as happens with in some jurisdictions with budget delays -- legal prohibition on using existing funds [0] (none of which are insolvency, though they may be default on the individual debts). [0] Which, looked at one way, is a subset of choice, since the actors not making the necessary choice to remove the legal roadblock are the political leadership of the state.
      - gamblor956 9y ago
        Do you have a cite for that? Because the only articles claiming that size of a backlog predate the budget resolution they passed last year after 2 years of no budget. They're currently on track to be out of deficit-spending within 2 or 3 years (possibly this year, if the Trump is to be believed) due to a combination of massive spending cuts ($6 billion in total cuts between 2015 and 2017) and tax revenue increases.
    - dragonwriter 9y ago
      > Illinois can currently pay its debts as they come due, so it is currently solvent. It almost certainly can, if it chooses to, but it hasn't been choosing to, if you consider the pension fund distinct from the state.
- admax88q 9y ago
  Yay it's time for HN pedantry! Bankrupt can also mean insolvent, it is not limited to the legal definition[1]. But more importantly you know what the person you're replying to meant. That they think Illinois is essentially out of money and pretending they're not. You could have furthered this into an interesting discussion on the financial health of Illinois, but instead you found a way to feel intellectually superior without actually having to engage in discourse and without having put forward any ideas that could be challenged. Your comment illustrates a common theme on sites like Reddit and HN, where people want to "win" the conversation as fast as possible. They find a easy and superficial way to call out another comment or article as "incorrect" and avoid putting forward anything of substance or actually worth talking about. [1] - https://www.merriam-webster.com/dictionary/bankrupt https://www.merriam-webster.com/dictionary/bankrupt
  - bedhead 9y ago
    "Yay it's time for HN pedantry!" Ha! Might be the defining characteristic of HN.
- gpm 9y ago
  Bankruptcy is an English word that just means you are insolvent (unable to pay your debts) not a legal state. There just happens to be a legal state named after it in the US. And a state can go rid itself of debt similar to a normal bankruptcy. Since they have sovereign immunity they can just declare that some or all of the debt is void and won't be paid back and not face any consequences (other than lenders possibly choosing not to lend them more money - just like with a normal bankruptcy).
- bogomipz 9y ago
  No, it also means "utter ruin, failure, depletion, or the like."[1]. A person can be said to be "morally bankrupt" and that would also be correct usage. Maybe consult the dictionary before before engaging in such unproductive pedantry. [1] http://www.dictionary.com/browse/bankruptcy http://www.dictionary.com/browse/bankruptcy

by pg_bot 9y ago

dragonwriter 9y ago

> Illinois is bankrupt No, it's not. Bankruptcy is a legal state, and one which is not open to US states. It's not even insolvent, which “bankrupt” is often incorrectly used as a synonym for. It may have a projected future insolvency, but that's a different issue.

rayiner 9y ago
Insolvency means your liabilities exceed your assets, or you can’t pay your debt as it comes due. If you’re a state like Illinois that has a constitutional restriction on reducing future pension obligations through a change in the law, then you’re cooking the books if you don’t count them as liabilities. And if you do, Illinois is almost certainly insolvent under the first definition. And since it’s not able to pay its bills in due course, it’s probably insolvent under the second definition too.
- runwerks 9y ago
  isn't the US then the same by your reasoning? we should flee the US as well.
  - cletus 9y ago
    The US is not bankrupt or insolvent: https://en.wikipedia.org/wiki/Financial_position_of_the_United_States https://en.wikipedia.org/wiki/Financial_position_of_the_Unit...
  - ww520 9y ago
    US Federal debt is in USD term so it can always repay its debt with printed USD. Technically it is not insolvent.
  - j4ship 9y ago
    the down votes of truth .... hn is a cult
  - apike 9y ago
    The US can always pay its debt because it is denominated in US dollars - it can print sufficient US dollars to meet its debt obligations. States do not have this ability.
  - hackeraccount 9y ago
    It might be if it had a constitutional amendment saying Medicaid, Medicare and/or Social Security were untouchable. It doesn't. There's no spending in the US that's not on the table. When or if push came to shove it's not hard to imagine some or all of those programs being cut just as it's not hard to imagine taxes going up.
- dragonwriter 9y ago
  > Insolvency means your liabilities exceed your assets, or you can’t pay your debt as it comes due. If you’re a state like Illinois that has a constitutional restriction on reducing future pension obligations through a change in the law, then you’re cooking the books if you don’t count them as liabilities. And if you do, Illinois is almost certainly insolvent under the first definition. You seem to be discounting assets, like taxation power (now, the politicsl consensus necessary for the state to use that power may not exist, but that's unwillingness to use an asset, not lack of assets.)
  - JumpCrisscross 9y ago
    > that's unwillingness to use an asset, not lack of assets That’s like marking at 100 a bond trading at 30 while arguing the problem isn’t the asset, it’s buyers’ unwillingness to pay the right price. In any case, potential to raise taxes is like potential to raise prices. It isn’t an asset until it’s signed and producing.
    - vostok 9y ago
      That's when you say that it's held-to-maturity and claim that it's not impaired.
  - masonic 9y ago
    assets, like taxation power Now we go straight from a misdefinition of "bankruptcy" to outright fabrication of "asset". Each of us may have earning power, for example, but that doesn't make it an asset we can legitimately put on a balance sheet. And taxation power is constrained by the US and IL Constitutions and even US and IL law.
- gamblor956 9y ago
  Insolvency is a legal term meaning that one cannot pay their debts when due (see the UCC). Illinois can currently pay its debts as they come due, so it is currently solvent. It is likely to become insolvent in the future, but that is not the current state.
  - wombatpm 9y ago
    Actually they can't. They currently have somewhere north of 5 billion in unpaid invoices. Their slow payment on contracts have driven some organizations into bankruptcy themselves. Many small business owners I know now refuse to do business with the state because thay can't wait years to be paid.
    - dragonwriter 9y ago
      > Actually they can't. They currently have somewhere north of 5 billion in unpaid invoices. There's a difference between not having the money to pay debts as they come due (which is insolvency) and just paying late by choice, incompetence, or -- as happens with in some jurisdictions with budget delays -- legal prohibition on using existing funds [0] (none of which are insolvency, though they may be default on the individual debts). [0] Which, looked at one way, is a subset of choice, since the actors not making the necessary choice to remove the legal roadblock are the political leadership of the state.
    - gamblor956 9y ago
      Do you have a cite for that? Because the only articles claiming that size of a backlog predate the budget resolution they passed last year after 2 years of no budget. They're currently on track to be out of deficit-spending within 2 or 3 years (possibly this year, if the Trump is to be believed) due to a combination of massive spending cuts ($6 billion in total cuts between 2015 and 2017) and tax revenue increases.
  - dragonwriter 9y ago
    > Illinois can currently pay its debts as they come due, so it is currently solvent. It almost certainly can, if it chooses to, but it hasn't been choosing to, if you consider the pension fund distinct from the state.
admax88q 9y ago
Yay it's time for HN pedantry! Bankrupt can also mean insolvent, it is not limited to the legal definition[1]. But more importantly you know what the person you're replying to meant. That they think Illinois is essentially out of money and pretending they're not. You could have furthered this into an interesting discussion on the financial health of Illinois, but instead you found a way to feel intellectually superior without actually having to engage in discourse and without having put forward any ideas that could be challenged. Your comment illustrates a common theme on sites like Reddit and HN, where people want to "win" the conversation as fast as possible. They find a easy and superficial way to call out another comment or article as "incorrect" and avoid putting forward anything of substance or actually worth talking about. [1] - https://www.merriam-webster.com/dictionary/bankrupt https://www.merriam-webster.com/dictionary/bankrupt
- bedhead 9y ago
  "Yay it's time for HN pedantry!" Ha! Might be the defining characteristic of HN.
gpm 9y ago
Bankruptcy is an English word that just means you are insolvent (unable to pay your debts) not a legal state. There just happens to be a legal state named after it in the US. And a state can go rid itself of debt similar to a normal bankruptcy. Since they have sovereign immunity they can just declare that some or all of the debt is void and won't be paid back and not face any consequences (other than lenders possibly choosing not to lend them more money - just like with a normal bankruptcy).
bogomipz 9y ago
No, it also means "utter ruin, failure, depletion, or the like."[1]. A person can be said to be "morally bankrupt" and that would also be correct usage. Maybe consult the dictionary before before engaging in such unproductive pedantry. [1] http://www.dictionary.com/browse/bankruptcy http://www.dictionary.com/browse/bankruptcy