November 12, 2010

THE DEBT TO REASON:

The Blue State Budget Crisis (Michael Gerson, 11/12/10, Real Clear Politics)

While massive state budget shortfalls are not limited to predominantly Democratic states, they are concentrated in them. "In California and New York," says John Hood of the John Locke Foundation, "the fiscal crisis flirts with bankruptcy." Explanations include rising Medicaid costs, increased spending on higher education, and the long-term challenge of funding public pensions. At the same time, says Hood, "All the major sources of revenue have cratered." The states doing worst are the ones, such as California and New York, that had irresponsible budgets going into the recession. States that were fiscally responsible during good economic times, such as Indiana, have had a softer landing.

The political crisis in many states has been delayed by President Obama's 2009 stimulus package, which temporarily plugged gaps in state budgets, and by a variety of budget gimmicks. Illinois, for example, has simply delayed payouts to doctors providing Medicaid, leaving about $6 billion in unpaid bills that will be eventually covered by the issuing of debt.

But now comes the reckoning.

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Posted by Orrin Judd at November 12, 2010 6:50 PM
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