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States’ Deteriorating Finances

Posted by Steve Markowitz on July 31, 2012

Much of the focus on America’s budget problems concerns the federal government which now has on the books about $16 trillion in debt.  However, like the federal government, states are up to their eyeballs in debt with one major difference; states cannot print money.

Earlier this month a non-partisan group chaired by former New York Lt. Gov. Richard Ravitch and former Fed chairman Paul Volker released a report of the State Budget Task Force.  It wasn’t pretty!  The group studied the finances of six states including California, Illinois, New Jersey, New York, Texas and Virginia that together represent about a third of the population in the United States.  The report made the following conclusions:

The threats and risks vary considerably from state to state, but the storm warnings are very serious.  Only an informed public can demand that the political systems, federal, state and local, recognize these problems and take effective action.  The costs, whether in service reductions or higher revenues, will be large.  Deferring action can only make the ultimate costs even greater.”

The State Budget Task Force’s report addresses an issue that can no longer be ignored.  Resolving the budgetary problems of state and municipal governments will not be simple or painless.  Politicians and bureaucrats with similar motivations as those that President Obama would turn over America’s healthcare to have ruined the finances of local and state governments.

Pres. Obama and his Progressive allies wrongfully vilified Gov. Scott Walker for addressing Wisconsin’s real financial problems.  The states mentioned by the Task Force will need to follow Walker’s lead.  There are no other solutions including Obama’s class warfare.

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