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Attacks on Government Workers in Tax Deal

Republican activist Grover Norquist once famously declared that he'd like to shrink the federal government to the point where he could drown it in a bathtub—but a little-noticed provision in the “tax cut compromise” we discussed today with Bernie Sanders might well drain the states' sinks first.

Yves Smith and Reuters blogger James Pethokoukis report that the billionaires-for-benefits compromise effectively ends the Build America Bonds program. That's the program which makes it easier for states to borrow money to cover their budget shortfalls—estimated at $140 billion just next year.

Who are the victims when the states can't borrow? Bill Fletcher reminded us this week of the attacks on public employees' pay. Public employee retirement benefits will probably be the first to go — estimated at $750 billion to more than $3 trillion.

Pethokoukis further notes that legislation amending bankruptcy law is in the works, possibly permitting states to declare bankruptcy. And if they declare bankruptcy, just like GM, workers' benefits are the first thing on the chopping block.

Former Wall Street trader turned blogger Bruce Krasting called the failure to renew the bonds a “black swan”--an unexpectedly huge event that has a disproportionate effect. And he wondered how legislators "could have blundered on this?”

But it's not a blunder. This is intentional. Union-busting, wage-and-benefit slashing, all snuck in under the radar.... And its impact will be felt first not in DC - where the money media watch - but in the states. We've seen this strategy from the right before -- move the action to the states, in the media dark. Think welfare reform.. And typically it works. Will Build America Bonds be next?

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Laura Flanders

Laura Flanders

Laura Flanders is a best-selling author and broadcaster who hosts the The Laura Flanders Show, where she interviews forward thinking people about the key questions of our time.  The LF Show airs weekly on KCET/LinkTV, FreeSpeech TV, and in English & Spanish in teleSUR. Flanders is also a contributing writer to The Nation and Yes! Magazine (“Commonomics”) and a regular guest on MSNBC. She is the author of six books, including The New York Times best-seller, BUSHWOMEN: Tales of a Cynical Species (Verso, 2004) and Blue GRIT: True Democrats Take Back Politics from the Politicians (Penguin Press, 2007). The Laura Flanders Show first aired on Air America Radio 2004-2008. You can find all her archives and more at or via Twitter @GRITlaura

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