Thread: State Cuts Hit Healthcare and Education, Help Bondholders

State Cuts Hit Healthcare and Education, Help Bondholders

Tuesday, 05 Jul 2011 07:42 AM

Florida is firing 1,300 workers. New York is cutting education funding and freezing public employee wages for three years. Arizona is slashing Medicaid coverage. And municipal bondholders are having their best year since President George H.W. Bush was in the White House.

Over the past six months, governors and lawmakers balanced their fiscal 2012 budgets and protected their credit ratings on the backs of public employees, school districts, cities and Medicaid recipients, all of whom bore the collective brunt of budget-cutting in states from New Jersey to Wisconsin to California.

While deficit pressure produced deep cuts in services to taxpayers, bondholders who placed their bets on municipal debt reaped the benefits of the market’s best second-quarter performance since 1992, even after analyst Meredith Whitney predicted as many as 100 municipal defaults valued in the “hundreds of billions of dollars.â€

Sure, cuts to services to Americans but plenty of money and benefits to hand out to illegals.