The more progressive (i.e. left-wing) a state’s policies the more likely the state will get into big financial trouble, Glenn Beck opined on his TV show.
Obviously a tsunami is going to put basically everyone under water and, as you’d expect, the greatest crisis since World War II means that right now 48 states are in trouble. But there’s a big difference between states that will almost always be at risk for going under water and then those that are better able to weather the storm. And that is based on how progressive their policies are.
These states not only heavily tax the rich and spread the wealth, but they also spend like times are always going to be good. They don’t have rainy day funds that can help them get through tough times.
Soak-the-rich states need fat economic times to continue or they can’t function. But when they run out of money, they can’t borrow it from the Federal Reserve Board or start running the printing presses. Their ability to borrow money from foreign investors (such as China) is much more constrained that the federal government’s ability to borrow from overseas. States have to issue promissory notes (IOUs) which allow them to turn their creditors into involuntary bondholders. (Couldn’t that be expropriation without proper compensation?)
States with liberal policies depend on tax revenue from big earners’ incomes, but when those incomes drop and big bonuses fail to materialize, the states are up the creek.
Look how much trouble ultra-progressive California is in. It issues IOUs and its political leaders refuse to cut spending down to sustainable levels. Like other progressive states, California doesn’t get it.
Yet Texas, Wyoming, Nebraska, Montana, and North Dakota are having an easier time weathering the storm, because they embrace conservative principles. Added Beck –
States with broad-based taxes with low rates will go through downturns, but they are so much less reliant on the rich people continuing to earn. You’ll also find much less of a union influence than those progressive states. Some other states that saved when times were good are Florida and Indiana and they are doing much better now as a result.