Good day all. I saw this interesting story last week on which states are so deeply in debt, there is no way to recover. Another interesting thing about the worst states is who is running them.
Yes, I think I may play the game, “Name the political Party.” Many of the states named are actually considered “wealthy.” They are also high tax states. For your viewing pleasure, here are the details from Fox News:
Connecticut may be the richest state in the country, on a per capita basis, but it’s racked up a sizable debt worth more than $53 billion – and it could be taxpayers who are forced to bail out the Constitution State, according to the former governor of Indiana.
“Someone’s going to the barbershop,” Mitch Daniels, a Republican, said during an interview with FOX Business’ Stuart Varney on Thursday. “The first will be the taxpayers, already beleaguered in some of these states.”
Connecticut has a small problem. They’ve raised taxes to the point that people are leaving the state. For all intents and purposes, the well has run dry. The next targets will be businesses, and I would be surprised if they haven’t already made plans to pull out if they have to.
And Connecticut isn’t the only state struggling with a debt crisis: California, Illinois, New Jersey and New York are unable to make pension payments to retired government workers.
And now we’re beginning to see the reasons for their financial problems.
In Illinois, for instance, vendors wait months to be paid by a government that’s $30 billion in debt, and one whose bonds are just one notch above junk bond status, according to Daniels. New York’s more than $356 billion in debt; New Jersey more than $104 billion; and California more than $428 billion.
“They’re just one of a number of states, including some of the biggest states, that are in deep water,” Daniels said. “I think it is irretrievable. Pensions is the core of it. It’s not the only fiscal recklessness that they have practiced, but in some of those cases, the bill are genuinely unpayable.”
And now we have hit the main cause of the problem. Out of control pensions. Thanks to the political hacks not only mismanaging the state budgets, they were also buying union votes with taxpayer funds. The politicians just kept layering on more and more benefits for unions with no idea how to pay for them.
Most likely, he, (Mitch Daniels), said, the debt will fall on state taxpayers. He warned, however, that some of these states need to be cautious about raising already high taxes that would likely not come close to the debt they’ve already racked up.
“There may be a way in some states to have a reset of the pension obligations, although in some places, they’ve actually been constitutionally protected,” he said.
I hate to disabuse Daniels of his thoughts on who is going to get shafted, but the taxpayers have reached the point of saying no more. As to the constitutional protections? Those can be taken away very quickly. However, what will most likely happen is the taxpayers start voting with their feet. We’re already seeing outflows of people form the high tax states. Ramp up taxes even further and the taxpayers will simply turn the keys to their homes into the bank and leave.
Now to play Guess the political Party. Would you care to guess which political party has been in control of the states in the worst shape? Here are your choices:
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