Some states are surviving on unemployment as they continue to fill the spending coffers with taxpayer debt. Benefits for government employees are protected, illegals are educated, and roads are paved. Like Welfare, states were force fed stimulus funds that covered about 60% of their problems, just enough to put them on the government needle.
Stimulus was número uno for a reason, there was a plan behind the insistence that it could not wait. City Journal: “From 2004 through 2008, the states jacked up spending by nearly 35 percent, or about double the rate of inflation plus population growth. Then came the post-2008 economic downturn, and tax revenues plunged. Since late 2008, therefore, states have faced accumulated budget deficits of some $300 billion.”
Obama satisfied their spending crave much like a pusher who provides a ‘taste’. These states were given a sample, used it, and were unable to put away the checkbook. Illinois created bonds to fund pensions. California issued almost half a million IOU’s in 2009. States ran dry but continued to spend. Obama just signed the Food Safety Modernization Act which will create even more financial havoc for agricultural states such as California.
WSJ: “True, management (i.e., taxpayers) often starts from a weak position in contract talks with government unions. But governors and legislators have the power to change that, too—because the bargaining rights of state and local government unions are primarily a matter of state law. By reopening their collective bargaining statutes, state officials can narrow the terms of future negotiations—restricting compulsory arbitration, say, or taking retiree health insurance off the table and making it a management prerogative. They can also pressure unions by revoking privileges such as the employer-collected dues checkoff. They can even eliminate future union contracts.”
Union pensions aside, more than half of state spending is awarded to public schools K-12 and Medicaid. John Wallis economic historian: “People didn’t want to raise taxes but they did. … …constitutional rules have made it harder to raise taxes than to raise expenditures.” In other words the systems has become corrupted.
WSJ: “There were differences between today and 19th century. Then, expensive state programs weren’t for government pensions or Medicaid. They were for roads and canals. And in today’s slow-growth economy, raising taxes won’t solve all of the states’ fiscal woes. Any real solution will require wholesale cuts in government programs and spending, too.”
A recent suggestion in the WSJ makes a lot of sense, if states go bankrupt they should lose their statehood. We discussed the NYT article floating the idea of state bankruptcy as an option which, like GM, would eventually be turned over to unions. Again, if Obama could create jobs through government communism would have worked. The bankruptcy suggestion refers to a state which is unable to exist without the assistance of the taxpayer tab, what right do they have to statehood? We were not founded to create socialism. If the state is to become a Welfare dependent on America what right does it have to the privileges of statehood? If you refuse to participate in your monthly board meetings why do you deserve to vote in their decisions?
If states are targeting bankruptcy that’s fine but there is a price to pay. There is no reason for them to be permitted to spread their spending addiction across America, no representation for failure. Obama brought Illinois to DC and the apple has fallen very close to the tree.