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Illinois gets downgraded by Moody’s (Lower than similarly Democrat run California)
Hotair ^ | 01/20/2012 | Ed Morrissey

Posted on 01/20/2012 12:25:47 PM PST by SeekAndFind

Say, remember when the state of Illinois took the Democratic approach to fixing their budget woes by raising taxes? The debt problems of the Land of Lincoln would disappear, Governor Pat Quinn argued, if the state hiked corporate and personal income tax rates by as much as two-thirds. The extra revenue would stabilize the state’s fiscal footing and pull them from the brink of financial disaster.

How well did that work out? As the Wall Street Journal reports today, Illinois debt has now been downgraded to the lowest rating of all 50 states by Moody’s:

Though too few noticed, this month Moody’s downgraded Illinois state debt to A2 from A1, the lowest among the 50 states. That’s worse even than California. The state’s cost of borrowing for $800 million of new 10-year general obligation bonds rose to 3.1%—which is 110 basis points higher than the 2% on top-rated 10-year bonds of more financially secure states.

This wasn’t supposed to happen. Only a year ago, Governor Pat Quinn and his fellow Democrats raised individual income taxes by 67% and the corporate tax rate by 46%. They did it to raise $7 billion in revenue, as the Governor put it, to “get Illinois back on fiscal sound footing” and improve the state’s credit rating.

So much for that. In its downgrade statement, Moody’s panned Illinois lawmakers for “a legislative session in which the state took no steps to implement lasting solutions to its severe pension underfunding or to its chronic bill payment delays.” An analysis by Bloomberg finds that the assets in the pension fund will only cover “45% of projected liabilities, the least of any state.” And—no surprise—in part because the tax increases have caused companies to leave Illinois, the state budget office confesses that as of this month the state still has $6.8 billion in unpaid bills and unaddressed obligations.

Another state tackling debt and budget issues went another direction, and Moody’s noticed the difference — and the WSJ warns Wisconsin voters to take a look at the alternative:

In contrast to the Illinois downgrade, Moody’s has praised Mr. Walker’s budget as “credit positive for Wisconsin,” adding that the money-saving reforms bring “the state’s finances closer to a structural budgetary balance.” As a result, Wisconsin jumped in Chief Executive magazine’s 2011 ranking of each state’s business climate—moving to 17th from 41st. Illinois dropped to 48th from 45th as ranked by the nation’s top CEOs.

Yet Mr. Walker, who balanced the budget without new taxes, is the governor facing a union-financed attempt to recall him from office this year. If Wisconsin voters want to see where a state ends up without the kind of reforms that Mr. Walker made, they need only look to the Greece next door.

Dan Mitchell says that the Illinois approach only exacerbated the problem by feeding the spending addiction rather than starving it:

In other words, higher taxes led to fiscal deterioration in Illinois, just as tax increases in Europe have been followed by bad outcomes.

Whenever any politician argues in favor of a higher tax burden, just keep these two points in mind:

1. Higher taxes encourage more government spending.

2. Higher taxes don’t raise as much money as politicians claim.

The combination of these two factors explains why higher taxes make things worse rather than better. And they explain why Europe is in trouble and why Illinois is in trouble.

They may finally be getting the message in Illinois. Republicans in the state legislature, outnumbered though they may be, have started an effort to repeal Quinn’s tax hikes. The failure of Quinn in Illinois does provide a valuable example of how not to address a fiscal crisis brought on by overspending, and one that voters in every state should study carefully. As part of that study, here is Mitchell’s video from May that teaches why this policy was always doomed to failure:

CLICK ABOVE LINK FOR THE VIDEO



TOPICS: Business/Economy; Culture/Society; Front Page News; News/Current Events; US: California; US: Illinois
KEYWORDS: california; corruption; debt; democrats; fraud; illinois; liberals; moodys

1 posted on 01/20/2012 12:25:52 PM PST by SeekAndFind
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To: SeekAndFind

The blame for this lies with Mike Madigan and his corrupt Democrat machine.

Madigan is Rich Daley’s state-level co-conspirator, and was the chief sponsor of Rod Blagojevich and Barack Obama.

Madigan will never be held accountable, because his daughter is the Attorney General of Illinois.


2 posted on 01/20/2012 12:32:38 PM PST by IncPen (Educating Barack Obama has been the most expensive project in human history)
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To: SeekAndFind

6.8 billion dollars in unpaid bills? Maybe they can get a home equity loan and consolidate all their debt. That, or they could sell their jewelry.


3 posted on 01/20/2012 12:32:38 PM PST by blueunicorn6 ("A crack shot and a good dancer")
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To: SeekAndFind

Well, Illinois will get to see if Cap & Trade works, come this August.


4 posted on 01/20/2012 12:35:41 PM PST by twistedwrench
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To: SeekAndFind

Downgraded to junk status?


5 posted on 01/20/2012 12:43:16 PM PST by Jack Hydrazine (It's the end of the world as we know it and I feel fine!)
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To: SeekAndFind

Ah Yes and this is exactly the formula that Obama has brought from IL to the national stage.


6 posted on 01/20/2012 12:47:57 PM PST by rod1
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To: SeekAndFind

I’m at a loss to understand how any state gets a worse rating than my California. I’m insulted... /s

Our legislature will read this, sigh, and ask each other what they have to do to get last place back. They’ve worked so hard to achieve what they have.

If there’s actually a state in worse mess than California, I send them my deepest sympathy.

One would hope that unlike California, at least 60% of their population could understand English.


7 posted on 01/20/2012 12:53:49 PM PST by DoughtyOne (Listen up RNC. If we wind up with Mitt Romney, you're not getting my vote in November.)
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To: SeekAndFind

Can we recall Quinn yet?


8 posted on 01/20/2012 12:55:53 PM PST by infool7 (Let us water the tree...)
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To: SeekAndFind

If I was a restaurant owner in Illinois, I’d watch out. Those Democrats will come in and order seven billion dollars worth of champagne, caviar and lobster and then whoosh, they’re out the exit without paying the bill headed to Indiana just as fast as they can get that Chevy Volt to go.


9 posted on 01/20/2012 1:03:39 PM PST by blueunicorn6 ("A crack shot and a good dancer")
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To: SeekAndFind

HEY ILLINOIS DEMS, how’s that 67% Income tax increase workin’ out for ya?
Indiana thanks you for the jobs.

Illinois can’t pay it’s bills now, but they somehow “FOUND’ another $3 Million to give Rockford today, for a new Choo-Choo station, that they are going to pay Amtrak $60 million to run a train through...


10 posted on 01/20/2012 1:12:50 PM PST by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
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To: DoughtyOne

Lieberals don’t care about facts, figures and balanced budgets? Only full speed ahead leftist agenda roll on down__truth be damned and all who love it as found in the warped leftist mindset.


11 posted on 01/20/2012 1:46:06 PM PST by tflabo (Restore the Republic)
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To: infool7

You know we live in eff’d up times when the effective, prudent Gov. Walker faces a mean recall while the bumbling, incompetent Gov. Quinn gets a free pass to flux up ILL-n-annoyed even more.


12 posted on 01/20/2012 1:50:50 PM PST by tflabo (Restore the Republic)
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To: SeekAndFind
That’s worse even than California.

I knew we would out California, California some day!

13 posted on 01/20/2012 2:03:58 PM PST by Graybeard58 (Eccl 10 v. 19 A feast is made for laughter, and wine maketh merry: but money answereth all things.)
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To: DoughtyOne
I’m at a loss to understand how any state gets a worse rating than my California. I’m insulted... /s

I knew we would out California California some day!

14 posted on 01/20/2012 2:06:26 PM PST by Graybeard58 (Eccl 10 v. 19 A feast is made for laughter, and wine maketh merry: but money answereth all things.)
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To: Graybeard58

That does it Graybeard58, I’m never talking to you again! ;^)

We need to collaborate on a book titled, “Circling the Drain for Fun and Profit”.


15 posted on 01/20/2012 2:11:06 PM PST by DoughtyOne (Listen up RNC. If we wind up with Mitt Romney, you're not getting my vote in November.)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Thanks SeekAndFind.


16 posted on 01/20/2012 4:08:43 PM PST by SunkenCiv (FReep this FReepathon!)
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To: Jack Hydrazine

Not as long as there be property in Illinois for Greedy Democrats to steal.

If you ask me this is just more evidence to the fact that few if any democrats deserve to be employed given the way they vote to treat other people’s opportunities to be employed.


17 posted on 01/20/2012 4:09:08 PM PST by Monorprise
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To: SeekAndFind

Alaska got a AAA rating again. Hmmm.


18 posted on 01/20/2012 4:11:03 PM PST by Jet Jaguar (Romney=Gun Grabber.)
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To: Jack Hydrazine

Downgraded to junk status?

Not even close yet, although it should be at this point.


19 posted on 01/20/2012 4:20:40 PM PST by LRoggy (Peter's Son's Business)
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To: Impy; BillyBoy; SJackson

Illinois ping


20 posted on 01/20/2012 6:42:22 PM PST by Clintonfatigued (A chameleon belongs in a pet store, not the White House)
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To: blueunicorn6
Actually, a lot of places no longer take state credit cards, and many vendors refuse state orders unless accompanied by a check in the full amount.

My brother was at a gas station where some guy in a state car wanted to pay with a state card, was refused, and then refused to put the bill on his own private card until the pump jockey threatened to call the state troopers for a "gas 'n dash." A good laugh was had by all.

21 posted on 01/20/2012 8:04:30 PM PST by VanShuyten ("a shadow...draped nobly in the folds of a gorgeous eloquence.")
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To: SeekAndFind

If the RNC could wake up, these facts for almost all Blue State Dem run legs. and guvs, would wake up so many voters who just accept more taxes, regs and spending as their fate. It is time that the RNC earn its bucks by spending some bucks many of us send in for ads to keep the campaign fresh in the minds of voters that we are facing Obama and destruction not just a host of GOP primaries.


22 posted on 01/21/2012 1:44:53 PM PST by phillyfanatic
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To: SeekAndFind

When the state goes bankrupt, will it revert to territorial status?


23 posted on 01/21/2012 5:15:04 PM PST by reg45 (I'm not angry that Lincoln freed the slaves. I'm angry that Franklin Roosevelt bought them back.)
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