States Hurting
US States currently expect budget gaps of $32 Billion for the remainder of this fiscal year and an additional $65 Billion for the following year. These estimates, of course, are likely to get worse if trends in other economic indicators are any measure. As many as 41 states are running budget shortfalls– Arizona, California, new York, Wisconsin, Minnesota, and Kansas have the largest budget gaps on a percentage basis. The National Conference of State Legislators issued a comprehensive report on the projected state budget shortfalls.
Lacking the federal government’s ability to print money, states must find a way to close these gaps by finding additional sources of revenue and/or reducing expenditures. Might the Fed’s printing presses a third way for state’s to close their budget deficits through a federal bailout provide? President Elect Obama has hinted at supporting a $100 Billion spending package for states.
While Governor Arnold Schwarzenegger is preparing to pay vendors with IOU’s for only the second time in state history, two governors– Rick Perry of Texas, who is not running a shortfall, and Mark Sanford of South who is– argued against a state bailout in a Wall Street Journal editorial on the ideological grounds:
- Concerns for the federal deficit “crossing the Rubicon.”
- Concerns “the bailout mentality” threatens America’s sense of personal responsibility.
- Concerns constitutional federalism is giving way to a federal government that is better off not “believing it has all the answers.”
Monitoring the federal government's intervention in the economy and financial markets.
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February 7th, 2009 at 11:37 PM
Ticking time bomb, within these are state pension funds, that have not been looked at. These states many of them stepped away from social security. They have independent systems and invested in what, things that have greatly depreciated.
It’s like a imperfect or perfect storm, when does social security hit its shortfall? That must have moved up, it is based on income and that is falling. Unemployment moves that forward, the day that the general fund looses the surplus and then the system itself need to be readjusted.
Wow when do we have the balls to tell people they get nothing unless they have nothing? Seriously it isn’t there what is the limit to printing capital? China has to buy the bonds, don’t they? What if they say no? They may repossess us or better yet foreclose on us?
They say we need to reduce the debt and we do what increase it?
Oh my its all about efficiency get with it, and get over the excess, learn to enjoy things that cost less. Stop with the paper trading already. Get efficient find the hard costs and cut them get modest but please get back to attention to details.
Urban planning and eminent domain the next few decades should be about making everything more efficient and sustainable. Cleaner and safer and more secure, make sure the values are real.