Illinois, destroyed:
Illinois lawmakers were in disarray Thursday as they groped for stopgap measures to address a $13 billion deficit equaling nearly half of the state’s general-fund revenue.
The state faces one of the nation’s worst budget crises, spilled over in part from the broader national economic crunch, and its current bond ratings lag only California’s. But the confusion in the legislature indicates that serious steps to fix state finances won’t be taken until after the November elections—if then…
…Any hopes that the national economic recovery would help the budget discussions were dashed this week when Illinois disclosed that revenue for April —when most citizens pay taxes—fell more than 15% from the same month a year ago, or $501 million, in part because of a $345 million drop in federal aid. Gross personal income-tax receipts, a major revenue source, dropped $103 million, or 8.1%.
And that last bit, by the way, puts to rest any notion that we are in a recovery. If we were recovering, then State tax revenues would at least be stabilizing, but they are still falling. They might not be falling as precipitously as they were last year, but they are still falling. Which means that less people are working; working people are earning less; people are spending less…the economy is contracting.
Illinois – like California, New York and New Jersey – just illustrate in the most stark terms where liberalism brings you: to bankruptcy. Liberals have just spent and spent and when revenues didn’t keep up with political promises, they borrowed. And now the bill has come due – and there simply isn’t enough money to pay for liberalism.
Naturally, liberals are refusing to face reality. New Jersey has proven lucky in getting Chris Christie as governor – the governor has the power (and Christie has the guts) to do do what is necessary to bring things under control. Elsewhere, it will actually take the votes of liberals to undue the damage of liberalism. And so it isn’t happening – as you can see, in Illinois they are just trying to find some sort of stop gap to keep things going for a little while…until after the elections, when either the GOP will be saddled with the problem, or re-elected Democrats will feel safe in hammering the Illinois taxpayer.
The States are in acute crisis because they can’t print money. The United States appears to be a going financial concern because the Federal Reserve can print money – and by printing a couple trillion over the past year, the Federal Reserve has made it seem like a recovery is ongoing. But, it isn’t – and, in fact, all the fake money has just made things worse (we’ve taken the bad debts of stupid bankers and turned them in to the bad debts of an electorate which elected Obama). But even with the magic of Federal Reserve, there is a limit – and we’re very fast approaching it (maybe by as soon as 2013).
We hit that wall, and complete collapse will greet us, just as it is greeting the great State of Illinois – not enough money to pay all the promises. We can still avert if, if we elect a Republican Congress in November – but it will be a close run thing. We might not have enough time to avert the worst sort of crash (there will be a crash – what remains to be determined is how bad it will be).
HAT TIP: Mish’s
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