This story in today’s Boston Globe, reporting that the Massachusetts Turnpike Authority will face bone-crushing additional debt payments if the Legislature tries to repeal the absurd toll increases the authority’s board recently approved, has me wondering why we shouldn’t just let the Pike go into bankruptcy.
Regardless of why and how all this happened, the idea that the Legislature can’t replace something stupid (toll hikes) with something smart (a higher gas tax) because of deals that the Pike negotiated in the credit market smacks of extortion. I hope legislators will seriously consider doing what they think is right for the public, and let the Pike stew in its own mess.
Weirdly enough, some of this has to do with the bankrupt financial firm with which the Pike did much of its business, Lehman Brothers.
And by the way, I think my credentials as a good-government liberal are pretty much indisputable. If I’m taking a Howie Carr-like position on all this, then I think it’s likely these hacks have lost virtually all the support they ever had.
The Outraged Liberal has some additional thoughts.
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Two wrongs don’t make a right. Or in this case, Irresponsibility is not the correct response to irresponsibility.The first step the Pike will take in bankruptcy court will be to ask the judge to order a toll increase to pay its creditors, which he will do. End of story. Bankruptcy is not the answer, though it undoubtedly appeals to the statehouse politicians who can then say: we’re powerless to stop this. The people of Massachusetts have ignored the shell games going on at the Pike for decades, just like they’ve ignored the crap being pulled by their legislators and governors. Now it’s time to pay the tab for the inattention.Remember when Dukakis financed a presidential campaign off contributors with ties to the Big Dig, while ignoring cost overrun after cost overrun? Remember when his former head of the Big Dig was literally rubber stamping checks on the project? Remember when Weld slipped the Big Dig under the Pike’s wing so he could pump money into it without public oversight. Remember when he told everyone he was going to tear down the tollbooths, while at the same time telling the investment banks that he was going to use the toll revenue to pay the Big Dig debts? Remember when Cellucci and the bond lawyers were coming up with these “creative” financial solutions to solve the problems at the Pike and Big Dig? Well, that was the time to complain and step up and take action, instead everyone happily took the money from the interest swaps and ignored the risk. Trying to duck out on the debt now is neither responsible, nor reasonable.The message to Massachusetts voters is start paying attention to what your government is doing and take control of it.
What if the turnpike filed for chapter 7 (liquidation) instead of chapter 11, and took down the toll booths before doing so?I’d rather have the banks eat the loss, instead of tax-payers and toll-payers.
If Lehman Brothers’ bankruptcy has hurt the Turnpike Authority, shouldn’t we assume that a bankruptcy of the Turnpike Authority will hurt others, too? Maybe even individual taxpayers? the Commonwealth and its overall financial health? Have the consequences been thought through? Is bankruptcy supposed to function as a financial spanking? Does it?
And by the way, I think my credentials as a good-government liberal are pretty much indisputable. If I’m taking a Howie Carr-like position on all this, then I think it’s likely these hacks have lost virtually all the support they ever had.Amen!
It’s a measure of how frustrated and angry we are about this whole thing that the subject of letting the Pike go bankrupt is even being discussed. The Authority will be put out of existence anyway, so let it crash. What are the creditors going to do, padlock the road? These were sleazy, risky financial instruments that they fell into in the desperate quest for cash. Let those that created them pay the price.I know, that’s a rash, irresponsible statement, but somewhere up the line those responsible have to pay.
Okay, let me then pose my point more directly: won’t the way the state government handles the Turnpike Authority situation affect how investors view Massachusetts bonds of any sort in the future, for example, scaring them off from buying them if the state won’t stand behind them?
Your second wrong won’t make a right either.Individual investors who are holding Masspike bonds (purchased when they were rated AAA by the ratings services that were supposed to be trustworthy) will be screwed out of billions of dollars.You will just be moving the problem from one agency to millions of individuals who did nothing wrong. it’s not just about future investors, but current investors whose money is tied up in that debt, and who were suckered in.
Jim: I’m not saying that Massachusetts shouldn’t meet its obligations. But if, as the Globe reports, the investors say, No, you may not cancel the toll hikes and raise the gas tax instead, because if you do we will saddle you with hundreds of millions of dollars in extra debt payments, at that point, I say screw them, and let them lose their money. It is no business of theirs how we meet our obligations, only that we do.