Bankruptcy For States?
Jan 28, 2011 Updates
Newt Gingrich is in the process of lobbying the U.S. Congress to pass legislation that would allow states to declare bankruptcy in U.S. Bankruptcy Court. That legislation would require an entire new chapter to the U.S. Bankruptcy Code. Governors of states in the northeast are probably cheering Newt on, and might even be paying him to lobby Congress for this legislation. They want to dump all of the pensions they pay to state retirees, and the health plans they have for state retirees by filing petitions for relief in the U.S. Bankruptcy Court.
I say that his idea is a bone headed concept, for several reasons. In theory, the states are supposed to be their own sovereign entities. Purists that really buy into the Tenth Amendment to the U.S. Constitution would be slapped in the face with a bankruptcy chapter that applies to the states, as that would put them on the same footing as counties and cities, who already can obtain relief under Chapter 9 of the Bankruptcy Act. To allow sovereign states to seek bankruptcy relief would be to admit that states are nothing more than political subdivisions of the United States, as apposed to sovereign entities in their own right.
There are more substantive reasons for not allowing states to obtain federal bankruptcy relief. Georgia, for example, already displays a high level of financial irresponsibility without having federal bankruptcy relief in its financial toolbox. Last year, the Georgia General Assembly slapped a full range of so called “user fees” on civil court filings. Court filing fees doubled everywhere, and appeal costs exploded with the irresponsible and short sighted legislation. The General Assembly slaps a landfill cleanup fee on the purchase of new tires at $1 per tire. It then takes the money that was supposed to be earmarked to the Solid Waste and Hazardous Waste Trust Fund for tire cleanup, and pays those funds into the state’s general account. $122 million generated from the tire fees went into the state’s general account, as opposed to the trust fund where it was designated to be deposited. $25.7 million in pre-paid cell phone fees were supposed to be paid into a trust fund to upgrade 911 centers around the state, but that money got paid into the state’s general fund as well.
Consider the tolls collected on the Georgia 400 toll road in Fulton County. These tolls were supposed to expire in 2011, but the General Assembly wants to continue collecting these tolls anyway, in violation of the pact it made with the people when this road was built.
The General Assembly over the past eight years has furloughed teachers and state employees, because they had no responsible way to cut the state budget. They have dumped the financing of local schools and other projects on the backs of local governments and local property owners. This legislative body has had the ability and the wherewithal to obtain the revenue needed to keep the state budget balanced, but they have used ideological reasons year after year to continue teacher and state employee furloughs.
Several years ago, the General Assembly removed the sales tax on its most steady source of revenue, groceries, and the state has seen its revenue collections trail off wildly in the recent Great Recession. After encountering a radical decline in sales tax revenues during the Great Recession, our irresponsible General Assembly recently voted to appropriate $1.6 million per year to pay off bonds for the building of the “Go Fish” museum in Perry. This museum will cost $16 million total over the next ten years. The move was so financially irresponsible, the museum was featured in a New York Times article two weeks ago, and was compared to the “Bridge to Nowhere” that the Congress wanted to build in Alaska.
In short, the states do not need another tool of financial irresponsibility in their financial toolbox. If states in the northeast want to dump employee pensions and employee and retiree benefit packages, they should enact legislation to allow themselves to do it. This is one piece of proposed legislation in the U.S. Congress that should not ever see the light of day.
Steven Harrell has practiced law in Perry, Georgia since 1989.
He is the author of The Unionist, A Novel of the Civil War and The Rifle Captain, A Novel of World War I. Both are available at Amazon.com. You may email him at sharrell@comsouth.net.
The Fall of the Little Giant
Jan 14, 2011 Updates
Senator Stephen Douglas of Illinois wrote and introduced the legislation in 1854 that became known as the Kansas-Nebraska Act. He was a champion of a policy known as “popular sovereignty,” which allowed the voters in a territory to choose between petitioning for admission as a slave or a free state, depending on the outcome of local elections. Douglas knew that the climate and soil conditions in Kansas and Nebraska were not conducive for the production of cotton, but he pushed this concept anyway to attract support from Southern voters and politicians. Douglas had his sights on the Presidential Election of 1860.
He was nicknamed “The Little Giant”, because of the enormous impact he had on national politics. Douglas soon became embroiled in a controversy that would later sink his chances of winning the Presidential nomination in 1860, and increase the chances for the Republican nominee.
Disaffected abolitionists, free soil Democrats, and free soil Whigs soon met and formed their own political party in response to the Kansas-Nebraska Act of 1854. They named their new party the Republican Party, and they ran John C. Fremont for President in 1856. Fremont lost to James Buchanan, a Democrat from Pennsylvania. Buchanan then began one of the most corrupt administrations in history.
Kansas was first settled by slave owners from neighboring Missouri. They soon set up their headquarters near a town called LeCompton. The free soil settlers set up around what is now Lawrence and Topeka, and they soon outnumbered the slave owners by a substantial margin. Violence soon broke out between the two factions there, and the U.S. Army was called in to keep the peace there. In 1856, a group of slave owners convened a convention in LeCompton, and reported to Congress that they had held a statewide referendum on statehood, and they sought admission into the Union as a slave state.
The U.S. Senate voted to admit Kansas into the Union as a slave state, and Buchanan’s men even bribed some Northern senators into voting for the bill. Newspaper reporters were all over Kansas, though, and they reported massive voter fraud in the region, as well as illegal ballot box stuffing. Stephen Douglas investigated these allegations himself, and he learned that a majority of residents in Kansas actually were free soil settlers. His integrity prevented him from supporting the LeCompton Convention. In December of 1857, Douglas met with President Buchanan at the White House. He argued that to admit Kansas as a slave state would make a travesty of his theory of popular sovereignty.
He warned that if Buchanan supported the admission of Kansas into the Union as a slave state, that it would split the Democratic Party. The U.S. Senate, dominated by a southern controlled majority of Democrats, voted to admit Kansas as a slave state on March 23, 1858. The battle over Kansas was not over yet, though. Stephen Douglas and his allies worked hard to convince his friends and Republicans and northern Democrats in the House of Representatives to defeat the admission of Kansas under the LeCompton Constitution. Congressman Alexander Stephens from Georgia remarked concerning the Congressional bickering over Kansas: “All things here are tending my mind to the conclusion that the Union cannot and will not last long.” On April 1, 1858, a coalition of northern Democrats, Republicans, and a handful of American party members joined together to defeat the LeCompton Kansas bill by a vote of 120 to 112. The fight for Kansas was over until 1861, when it was later admitted into the Union as a free state.
In the Democratic Presidential Convention of 1860, southern Democrats remembered the work of Stephen Douglas in defeating the LeCompton Kansas Bill, and they bolted from the Democratic convention in Charleston. An Alabama editor wrote of Douglas: [This] “Demagogue of Illinois deserves to perish upon the gibbet of Democratic condemnation, and his loathsome carcass to be cast at the gate of the Federal City.” After the Southerners bolted the convention, they convened in Baltimore and nominated John C. Breckenridge of Kentucky for president. The remaining Democrats from the North nominated Stephen Douglas.
The Republicans met in Chicago and nominated Abraham Lincoln for president on their national ticket. Another party, the Constitutional Union Party, met and nominated John C. Bell of Tennessee for president. With the Democratic vote being split three different ways, Abraham Lincoln won the electoral vote and was elected the sixteenth President of the United States in 1860. The rancor in the Congress over the admission of Kansas as a slave state caused the Democratic Party to split and to scuttle the chances of the “Little Giant,” Stephen Douglas, its only truly national candidate.
Angry over the election of Republican Abraham Lincoln, South Carolina formed a constitutional convention at Charleston in December of 1860, and the delegates at the convention voted to dissolve the perpetual Union between the State of South Carolina and the United States. The ordinance of secession was passed, and a free nation began to unravel as other states took up the secession question.
Lincoln at Cooper Union
Jan 5, 2011 Updates
As we approach the 150th anniversary of the American Civil War, I will cover topics dealing with that conflict, and the explosive political issues that lead to the war. In October of 1859, Abraham Lincoln accepted an invitation to speak at Henry Ward Beecher’s church in Brooklyn, New York. He chose to speak on a question of great public importance, and he chose this speech as a method of outlining the national platform for the Republican Party in the upcoming Presidential Election of 1860. The speech was later sponsored by the Young Men’s Republican Union, and it was moved to the Cooper Institute. The board of the Cooper Institute included many prominent citizens of New York, including William Cullen Bryant. The prevailing and explosive national issue of the day was whether the Congress of the United States possessed the power to restrict or to prohibit the spread of slavery into new territories.
Lincoln carefully researched the background material for this speech, and he delivered the speech in the same manner as a legal brief. Abraham Lincoln was self taught. He supported himself in his young adulthood by keeping a store, splitting rails, and working as a day laborer. When he acquired the literary knowledge needed as a young man, he read law in a law office in Springfield, Illinois, and became a practicing attorney there. He rode the circuits of Illinois for years, and later acquired an impressive array of clients that included some of the largest banks and railroads of his day.
After weeks of careful legal research, this home grown product of the American Dream made his finest legal argument in the speech that he gave at the Cooper Institute on February 27, 1860. In the speech, he directly addresses the prevailing question concerning the spread of slavery into U.S. territories. Lincoln cuts to the heart of the issue at the beginning: “What is the form of government under which we live?
The answer must be: ‘The Constitution of the United States’ That Constitution consists of the original, framed in 1787, and under which the present government first went into operation, and twelve subsequently framed amendments, the first ten of which were framed in 1789.
Who were our fathers that framed the Constitution? I suppose the ‘thirty-nine’ who signed the original instrument may be fairly called our fathers who framed that part of the present Government.”
Lincoln then brilliantly refers to the Northwest Ordinance of 1787, which governed the settlement of the first U.S. territory, the Northwest Territory, out of which Illinois was later made a state. He later refers to a bill which was reported out of the Congress in 1789 which passed enabling legislation that enforced the Northwest Ordinance of 1787. Part of this legislation prohibited the institution of slavery in the Northwest Territory. “By 1789, . . .an act was passed to enforce the Ordinance of ’87, including the prohibition of slavery in the Northwestern Territory. . . It went through all its stages without a word of opposition, and finally passed both branches without yeas and nays, which is equivalent to a unanimous passage. . . This shows that, in their understanding, no dividing line dividing local from federal authority, nor anything in the Constitution, properly forbade Congress to prohibit slavery in the federal territory; else both their fidelity to correct principle, and their oath to support the Constitution, would have constrained them to oppose the prohibition.”
Lincoln pointed out that in 1789, of the Congress that passed the Northwest Ordinance, there were 16 sitting members that were part of the original 39 Founding Fathers of 1787. Their unanimous vote to prohibit slavery in the Northwest Territory demonstrated that Congress did have the power to exclude slavery in U.S. territories. Lincoln later refers to the territories that Congress obtained from Georgia and North Carolina. In these territories, Congress prohibited the importation of slaves from outside areas. Lincoln also mentions the Territory of Louisiana that was acquired by the Federal Government in 1803. In 1804, when Congress made that area a territory, it restricted the importation of slaves into the area from foreign powers, and from other points within the U.S.
When once again addressing the issue of whether Congress could prohibit the spread of slavery into the territories, Lincoln answers that question in the affirmative: “And then it is to be remembered that ‘our fathers, who framed the Government under which we live’ – the men who made the Constitution-decided this question in our favor, long ago-decided it without division among themselves, when making the decision; without division among themselves about the meaning of it after it was made, and so far as any evidence is left, without basing it upon any mistaken statement of facts.”
Lincoln then ends his impressive speech with forceful words that greatly impressed his audience: “Neither let us be slandered from our duty by false accusations against us, nor frightened from it by menaces of destruction to the Government nor of dungeons to ourselves. LET US HAVE FAITH THAT RIGHT MAKES MIGHT, AND IN THAT FAITH, LET US TO THE END, DARE TO DO OUR DUTY AS WE UNDERSTAND IT.”
A number of influential Republicans attended the Cooper Union speech in New York in February of 1860. They were greatly impressed by the well researched and forceful legal arguments Abraham Lincoln made there. William Seward at that time was the overwhelming favorite to win the Republican nomination for the Presidency of the United States. After the Cooper Union speech, Lincoln won many of Seward’s supporters over. Later that summer, in Chicago, in Lincoln’s home state of Illinois, many of the Republican delegates and their associates that were impressed by the Cooper Union Address would vote to nominate him as the Republican nominee for President of the United States.
Steven Harrell has practiced law in Perry, Georgia since 1989.
He is the author of The Unionist, A Novel of the Civil War and The Rifle Captain, A Novel of World War I. Both are available at Amazon.com, and Barnes&Noble.com. You may email him at sharrell@comsouth.net.
