Former Florida Gov. Jeb Bush says some U.S. states are “effectively bankrupt” already and probably would not be able to secure further credit if they were private entities.
In an exclusive Newsmax.TV interview, the two-term Florida governor was asked whether he is concerned that fiscally challenged states such as New York or California could lapse into bankruptcy.
“You’ve got to define bankruptcy,” he replied. “They are effectively bankrupt right now. Not New York necessarily. I’d say Illinois and California are close to it.”
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Bush said projected deficits, combined with future pension obligations, are causing “serious, serious problems” for several states.
“If these were private entities, they would be junk-bond rated, they probably wouldn’t be able to secure credit,” Bush said.
Bush said he worries that the Obama administration may act to bailout states swimming in red ink, thereby rewarding their profligacy.
“There’s an implied support that shouldn’t be there from Washington, that I think keeps them afloat,” Bush tells Newsmax.
“We should make sure that the bad-behaving states don’t get in the front of the line for any kind of bailout in Washington at the expense of states like Florida who have behaved significantly better.”
The federal reaction to deep state indebtedness “may be the place where the international financial community will express its disgust with the fiscal policy of the United States first,” Bush said.
Bush also criticized the Obama administration for its “command-and-control” approach to managing the economy.
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