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Dire States (Deep in debt, most governors will have to either raise taxes or cut spending)
The Atlantic ^ | 1/05/11 | Megan McArdle

Posted on 01/05/2011 8:01:20 AM PST by Libloather

Dire States
Deep in debt, most governors will have to either raise taxes or cut spending - exactly what not to do when recovering from a recession.
By Megan McArdle

**SNIP**

Many states have what you might call a “Don’t kill Grandma” problem: spending creates dependent—and stubborn—constituencies. At least New York doesn’t have the legislative gridlock of California, where ballot initiatives have mandated spending and prevented tax increases, and a two-thirds-majority requirement to pass tax increases has resulted in a stalemate between free-spending Democrats and tax-averse Republicans. New York’s local economy hasn’t been devastated by the collapse of a primary local industry, as have those of Michigan and Nevada, where unemployment tops 12 percent. It does not, like New Jersey, have a history of underfunding its pensions.

True, the state is no repository of fiscal virtue. As Josh Barro of the Manhattan Institute says, “They’ve made their pension payments on time because state courts have essentially ordered them to make their pension payments on time—if the legislature had had the option to misbehave, I’m sure they would have.” But its vices aren’t excessive. Barro says that New York’s budget woes are probably worse than the average state’s, but not as bad as those of California, Illinois, or New Jersey.

(Excerpt) Read more at theatlantic.com ...


TOPICS: Crime/Corruption; Extended News; Government; News/Current Events
KEYWORDS: debt; governors; spending; taxes
...cut spending - exactly what not to do when recovering from a recession.

Some folks just don't get it.

1 posted on 01/05/2011 8:01:27 AM PST by Libloather
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To: Libloather

I say go a step further. Accept less federal money.


2 posted on 01/05/2011 8:03:13 AM PST by cripplecreek (Remember the River Raisin! (look it up))
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To: Libloather
Dire States (Deep in debt, most governors will have to either raise taxes or cut spending)

Money for nothing and your chicks for free.

3 posted on 01/05/2011 8:04:02 AM PST by dfwgator
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To: Libloather
In the race to the bottom, I think Illinois will win. (sigh)
4 posted on 01/05/2011 8:06:48 AM PST by teletech (Say NO to RINOS!)
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To: Libloather

I heard some politician here the other day make the statement that if revenues are down (and he stated they were due to the majority coming from income tax)that the only answer would be to raise sales tax.

They just don’t get it. How about not building anymore parks, rec centers, adult centers, stadiums, etc? Things that are nice but not necessary.


5 posted on 01/05/2011 8:08:19 AM PST by doodad
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To: Libloather
By the very definition of insanity, they're nucking futs.

There is only one thing that can be done - and it ain't raising taaaxes.

6 posted on 01/05/2011 8:08:55 AM PST by skeeter
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To: Libloather
I've got an idea where Cuomo can start here in NYS...

(New York) State put freeze on hiring, then added 51,464 people

Check out the price tag.

7 posted on 01/05/2011 8:11:14 AM PST by mewzilla (Hey, Schumer, your Lockerbie report left quite a bit out.)
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I hope people consider the possibility that the states have been given a piece of cheese on a mousetrap, and they happily ate it without regard for the consequences. Many of the states are now like welfare mothers at the mercy of the national govt. and by extension, the Fed.

This is likely to end, eventually, with states being “bailed out” much like GM and the huge banks. Bailed out by who? Well, the national govt...but in reality the fed, which is not really a part of the govt, in many ways you could say they are above the govt.

Local communities have fallen for this to, by making exotic investments with pension funds and bond issues. So all the legitimate talk of state and local government standing up for themselves and reasserting their roles has a roadblock in that they have become just like a huge percentage of the country, dependent on the state through debt.

In Europe the move has already started to use pension funds in the same way the US has used social security. Private pensions you say? Well, the funds here in the US are invested which gives the Fed the power to do with them what they want. The “reforms” of the last few years have done nothing but increase the control of the biggest of the big banks. They can technically shut down any BUSINESS they want, not just banks.

As the financial crisis pushes further and includes the states, rather than creating an opportunity for the states to reassert themselves, most will go with their hat in hand to the national govt and the fed and, in a de facto manner, sign away many remaining powers.

Much like the states technically still have power over education except for one detail........federal money...printed by the fed out of thin air.

This is just a further chapter in a kabuki theater that has been going on since 1913.

Cutting taxes and some spending is great, but it really is like changing the top layer of icing on a 3 foot tall wedding cake.


8 posted on 01/05/2011 8:20:21 AM PST by Crimson Elephant
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To: teletech
In the race to the bottom, I think Illinois will win.

Isn't that where the rookie Kenyan calls home?

9 posted on 01/05/2011 8:22:32 AM PST by Libloather (Teapublican, PROUD birther, mobster, pro-lifer, anti-warmer, enemy of the state, extremist....)
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To: cripplecreek

If I were governor........as a first step I would quit sending the Feds all our money.


10 posted on 01/05/2011 8:23:39 AM PST by sheana
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To: sheana

True enough but its a lot easier when you aren’t accepting it.


11 posted on 01/05/2011 8:26:19 AM PST by cripplecreek (Remember the River Raisin! (look it up))
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To: Crimson Elephant

The Fed is turning into the equivalent of the British Treasury. Except this is like the US Government being run by the Chairman of the Bank of England. And of course, Bernanke cannot be removed by the President.


12 posted on 01/05/2011 8:53:45 AM PST by RobbyS (Pray with the suffering souls.)
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To: Libloather
“Some states, such as ALASKA and TEXAS, had accumulated substantial rainy-day funds before the crisis,..”

Where WHAT kind of governing principles are used????

I guess we should be happy they mentioned the responsible states at all...

13 posted on 01/05/2011 8:55:28 AM PST by ROLF of the HILL COUNTRY
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To: Libloather
Some states, such as Alaska and Texas, had accumulated substantial rainy-day funds before the crisis...

I grew up a military brat - all over the world. I had no roots, no hometown.

I chose my own hometown as a very young adult.

Once again, I am reminded that I chose well. :)

14 posted on 01/05/2011 9:01:09 AM PST by Allegra (You're a towel.)
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To: Libloather

Poor Megan has been educated way beyond her intelligence.


15 posted on 01/05/2011 9:07:06 AM PST by Niteranger68 (I am in the party of "HELL NO"!)
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To: Libloather
Isn't that where the rookie Kenyan calls home?

Yes, it is also my state (unfortunately).

16 posted on 01/05/2011 9:14:40 AM PST by teletech (Say NO to RINOS!)
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To: Libloather

So according to Democraps there are two times where you gotta spend:
1) when you are in a recession
and
2) when you are not in a recession


17 posted on 01/05/2011 9:16:09 AM PST by Mr. K
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To: teletech

No sir here in California we are years ahead of you we are so far in the hole we can’t see day light,now we have Jerry Brown as governor to put the lid on the hole.

PS send help take liberal for a ride.


18 posted on 01/05/2011 9:17:19 AM PST by Vaduz
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To: dfwgator
We got to install government health care.
Environmental energy-y-y
We got to push these trains and bike lanes.
It's gonna take more money-y-y-y.

19 posted on 01/05/2011 9:18:46 AM PST by OrangeHoof (Washington, we Texans want a divorce!)
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To: Libloather

This is a very fair, nicely written article.
Congratulations to Megan McArdle. Good work.


20 posted on 01/05/2011 9:23:50 AM PST by Lancey Howard
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To: doodad

In Omaha, as everywhere, money is a problem. So the mayor put out a budget that included something like $1.5 million to “fight truancy”. The population of the city, proper, is maybe like 400,000. How much truancy can there be? Why should the city pay for it? (My data could be “iffy” on this stuff, it is all IIRC.) Anyway, he just does NOT GET IT, and therefore a recall election is to be held on 1/25/11.


21 posted on 01/05/2011 9:26:01 AM PST by NEMDF
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To: teletech
Perhaps Gov Quinn should just raise taxes in the counties he carried in the election. Photobucket That would be the BLUE ones.
22 posted on 01/05/2011 9:29:43 AM PST by BobinIL
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To: BobinIL
Perhaps Gov Quinn should just raise taxes in the counties he carried in the election.

Good idea!

23 posted on 01/05/2011 9:39:03 AM PST by teletech (Say NO to RINOS!)
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To: BobinIL

That electoral map of Illinois is just stunning.
The average resident of your state is absolutely and
forever SCREWED by the enormous leech population of
Cook County.


24 posted on 01/05/2011 9:47:19 AM PST by Buckeye McFrog
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To: Allegra
Holy Cow Allegra - glad i clicked to your FR home page - you picked Baghdad?? You seem to have more cahones than most i know!
25 posted on 01/05/2011 12:11:47 PM PST by corkoman
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To: corkoman
Holy Cow Allegra - glad i clicked to your FR home page - you picked Baghdad??

LOL - Baghdad is where I work.

The great state of Texas is my home. ;-)

26 posted on 01/05/2011 12:39:24 PM PST by Allegra (You're a towel.)
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