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Many states are hurting for revenue in the current economic downturn. As people lose jobs, consumers cut back on spending, and housing prices decline, states' tax incomes have plummeted.
But some states think they've found a musty but lucrative pot of money to dip into. More than half a century ago, during World War Two, the United States urged Americans to buy bonds to support the war effort. And we did, hundreds of billions of dollars' worth.
These war bonds were redeemable, with modest interest, but not for the unusually long period of 40 years. Little wonder almost $17 billion worth of certificates were never cashed. The bonds were lost, inadvertently thrown away or destroyed. No doubt others lie forgotten in drawers and attics across the land.
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Now six U.S. states have filed suit, seeking the uncollected money due bond buyers who live or lived in their states. And as the New York Times points out in a detailed story, this is tricky business.
The Federal Government is contesting the suit, saying the bonds were an agreement between it and its citizens that has nothing to do with the states. Besides, the feds argue, the U.S. Government is immune to lawsuits unless it agrees to be sued, which it most certainly has not.
The states counter that people bought bonds to help the war, and maybe themselves one day when they cashed them in. They certainly weren't donating to the general U.S. treasury.
The case will reach federal courts soon. There are longstanding constitutional issues involved, so the U.S. Supreme Court could one day be asked to tell the states whether they can collect the windfall of cash from unclaimed war bonds. One would hope, though, that the recession would be long gone by that time.
Read more of Ted's personal reflections and stories from the road on his blog, Ted Landphair's America.
