As Matt Welch noted earlier, California's reckless spending and general fiscal irresponsibility has prompted Gov. Arnold Schwarzenegger to ask for a second bailout from Washington. In today's New York Post, the Manhattan Institute's Nicole Gelinas explains why New York is in equally sad shape:
How much debt has New York amassed since the millennium? A decade ago, New York state owed $45.1 billion, including the public-authority debt it guarantees. (Figures, from the city and state comptrollers, are in today's dollars.) Today, the total is $61.9 billion, a 37 percent jump.
When the New Year's ball fell in 1999, New York City had borrowed $49.6 billion. Today, it's $64.9 billion, a 31 percent rise….
New York has done its borrowing without feeling much pain—so far. Even as outstanding debt has skyrocketed, the city and state have enjoyed record-low interest rates, thanks to bubble-and-bailout monetary policy from Washington, which is still going strong.
Problem is, we've grown addicted—and the addiction will cost more as interest rates rise.
If New York continues to borrow and spend as it has, it'll be squeezed on both ends. Debt costs will rise, and a less productive economy won't be able to pay.