The Permanent State Bailout


A little more than a year ago, Reason ran a cover story on "Failed States: After a long spending binge, governors go begging for a handout. It won't be their last." Today the Wall Street Journal has an article titled "States Hope for a Rich Uncle: Governors lobby Washington for more money as stimulus aid runs out." Excerpt from the latter:

As the poet sang, there's joy in repetition

Strapped states, facing up to $180 billion in budget deficits in the next fiscal year, are going hat in hand to Washington.

California wants $6.9 billion in federal money for the next fiscal year, and Republican Gov. Arnold Schwarzenegger says he'll have to eliminate state health and welfare programs without it. Illinois, facing a $13 billion deficit that equals roughly half of the state's operating budget, has what it dubs a stimulus team and a group in Washington pressing for additional state aid. […]

But in Congress, members are balking at further subsidies amid an election-year outcry over the U.S. deficit and federal involvement in the economy. […]

"Our demand for services continues to grow, especially with underemployment and high unemployment—and we expect this trend to continue as we enter what is expected to be a slow-growth recovery," said Anna Richter Taylor, a spokeswoman for Democratic Gov. Ted Kulongoski of Oregon. […]

President Barack Obama said last month he was concerned about the potential for state and local government layoffs "because we haven't re-upped" money for states. Christina Romer, chairwoman of the White House Council of Economic Advisers, called for more help for states in a speech last week.

Do not cry for the beleaguered governors. As that last quote indicates, the White House will figure out a way to shovel enough money to protect those unionized public sector jobs. The fact that a U.S. president is concerned about government layoffs on the state level speaks volumes about how far we've gone, and how far we have left to go down. We are out of money, and people who are out of money cannot afford expensive make-work for inefficient laborers.

Second, as our "Failed States" story detailed, statehouses doubled their spending during the good times last decade. If they had merely kept spending growth at the rate of population+inflation growth, they'd have plenty of money left over for the demand in services precipitated by the recession. Since almost no one in this country is serious about cutting spending growth, fiscal irresponsibility on the state level has become a federal problem, and unless the political process intervenes, will become a federal entitlement.

She's onto something

What's perhaps most depressing of all is that this story, and all the related stories that we link to here every day, indicate more than anything else one overriding fact: We are not even within radar contact of facing reality on this stuff. States have known they were screwed for more than two years now, and yet last year they downsized payroll by less than one percent. Meanwhile, the most brilliant economic minds of Generation Obama, instead of saying "Gee, that whole stimulus thing led to results that were worse than our worst-case scenario about what would happen if we didn't pass the stimulus," are warning that "failure to take additional targeted actions to jump-start job creation would lead to slower recovery and higher unemployment for an extended period." Meanwhile, the opposition guy who has announced a plan to balance the budget in FIFTY-TWO FREAKING YEARS is being treated like a semi-dangerous radical by his own party.

I hear Mexico's nice….

NEXT: Pelosi on Democrats' Likely Health Care Procedure: "I like it because people don't have to vote on the Senate bill."

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  1. Chris Christie of New Jersey is about to fire the opening salvo in the war to get New Jersey state government under control.

    I hope against hope that he can somehow succeed where the Terminator failed.

    1. I second that emotion. He’s the only one I’ve heard from so far that has shown leadership and guts.

      1. Same here. His speeches have been stark, direct and unequivocal. He seems to be one of the only sane ones in the state.

    2. Chris Christie deserves more libertarian respect and attention right now.

  2. What this country and 99% of the people living in it need is a good swift kick in the ass by reality. It should have happened two years ago, but it will happen, despite anything Obama does. It’s going to hurt no matter what.

  3. I hear Mexico’s nice….
    I thought we were all moving to Costa Rica?

    1. Wait!! What happened to Pontoon City of Liberty in the middle of the Pacific!?!?!

  4. “I can taste the rainbow… with my taint.”

  5. Funny thing is that I was just checking out a site on emigrating to New Zealand this morning.

    1. Funny. During the GWB years, many Americans talked about moving to NZ ( Now it’s libertarians. Somehow I don’t think many people will actually do it.

      1. should’ve been “many left-wing Americans”

      2. Well I would but, I think me like many others just can’t move to NZ(or any other country for that matter) due to strict immigration laws pretty much everywhere, unless you have a doctors degree and are a millionaire.

        1. unless you have a doctors degree and are a millionaire.

          Just follow the bubbles that each stupid government move makes. Pretty easy to be a millionaire…

          Why do you think we have government created bubbles in the first place? You honestly think they are created by accident and not by design?

      3. I heard more poeple talking about Canada.

        1. Canada’s a frozen ice-box.

          1. Just wait a couple of years. Global warming will make Canada all balmy and subtropical.

            1. I’m from east coast Canada, and it’s been in the high 50’s and low 60’s since february. Northern Canada is cold, but where 90% of the population live it’s actually just like northern states.
              And while the recession never hit us that hard, our spending as a percentage of GDP was slightly higher than the US (although it was done to block a socialist take over; we have 5 political parties, 3 on the far left).
              If you’re coming, I’d wait until it gets really, REALLY bad, so we have time to sort ourselves out.

  6. We are not even within radar contact of facing reality on this stuff.

    Our current political class is, almost without exception, a collection of dismal failures distinguished only by whether they are incompetents, grifters, crooks, or merely feckless tools.

    Until they are, every one, out of power, there will be no fix. Sadly, that will most likely be precipitated only by fiscal, and thus financial/economic/social, catastrophe.

    1. Our current political classes isare, almost without exception, a collections of dismal failures distinguished only by whether they are incompetents, grifters, crooks, or merely feckless tools.

      It’s not just here. It’s not just us. Cold comfort, but it’s something.

      1. Oh, mommy, I ain’t no commie
        I’m just doing what I can to live the good old all American way
        It says right there in the constitution
        It’s really A-OK to have a revolution
        When the leaders that you choose
        Really don’t fit their shoes
        Oh, mister, I ain’t no sister
        I believe in the Bill Of Rights,

        Come on don’t you start a fight please
        I like to wear my hair long
        How can there be anything wrong
        When you’ve already accused me twice
        Of looking like Jesus Christ

        I’m only gettin’ tired of playing Punch and Judy
        I’m really half a mind to go and do my duty
        Like Mr. Patrick Henry said
        I got to be free or dead

        Mister Nixon, I ain’t a fixin’
        To speak Spanish on a plane or polish off the Liberty Bell
        I just want to sit here on the shelf
        And watch you finish off the place by yourself
        Please let me do what I wanna
        I just lay around the house and smoke marijuana

        It says right there in the constitution
        It’s really A-OK to have a revolution
        When the leaders that you made
        Just don’t make the grade
        Oh, mommy, I ain’t no commie
        But I hate to bust your bubble
        Cause there’s gonna be some trouble soon

  7. Have the feds made an implict guarantee* to cover the states fiscal irresponsibilities?

    * We know full well how that works out. We’ll just borrow another terabuck or two

  8. @Mike M.: The teachers union was protesting hours before he even spoke – I take that as a positive sign.
    Ultimately, though, its still an uphill fight – he must battle a Democrat-controlled legislature and a number of powerful unions. Can you be hopeful and skeptical at the same time?

  9. A little more than a year ago, Reason ran a cover story on “Failed States: After a long spending binge, governors go begging for a handout. It won’t be their last.”

    ‘Tis no fun being Cassandra.

  10. I hear Mexico’s nice….


  11. ‘Tis no fun being Cassandra.

    Says who? I’m having a great time pointing out to many people how the policies they advocated and the politicians they voted for got us into this mess. I mean, shit, I’m still in the handbasket with them, so I’ve gotta take some joy out of the whole thing.

    1. Frankly, the only enjoyment to be had in this situation is mashing people like joe’s faces in it. My sadistic streak usually sits pretty dormant, but man, our government imploding has brought it out in me. I am itching to crush anyone who even tries to defend this shit. Please, someone give me a target.

  12. I swore the next time I heard it I would comment.

    The formula a) of population growth (pg) + inflation (inf) is not correct. It is only a reasonable approximation for small values of pg and int, say 1 years worth.

    The more accurate formula is b) (1+pg)*(1+inf) – 1

    For small pg and inf, say 1%, a) gives 2% adn b) gives 2.01%.
    For a pg and inf of 50% (a decade’s worth) a) gives 100% and b) gives 125%. It get’s worse as pg and inf get bigger.

    Of course, the State and Fed Govts are still way out of line, but I’d like to see our side using a more credible formula.

    1. Seems to me that a gives a lower growth rate in all cases, which is kind of the idea, isn’t it?

    2. @ statistician: You’re clearly correct, but I always assumed few were dumb enough to actually think it meant literally adding the percentages of pg + inf.

  13. Important news: with yesterday’s wolf attack and this, it is now clear that iPods are finally making their move against us.


  14. This has nothing to do with article …. but wanted to know:

    Anybody here used to really like the Daily Show as long as they were making fun of W et. al. but now can’t stand it, because all they seem to do is defend and felate Obama?

    I don’t even Tivo that shit anymore. Used to love it.

    1. There is the intermittant comment about it here. There was even a thread about it a few months back. Just when it seems like Stewart might almost kinda be back to form, he tells Barney Frank what a great job he’s doing or something.

      I don’t remember the last time I watched it.

    2. John Stewart is the Bill Maher who is the Chris Matthews who is the Olberfuck who is the Madcow who sleeps with the progressives. That should be clear.

      1. See, I actually prefer Stewart over Maher. Watching Maher is about as fun as eating dry hay…

        1. I agree with that. Stewart still gets a plain ole poop joke or something in there once in a while. Maher hasn’t been any fun to watch since week 3 of “Politically Incorrect”.

          I accidently watched his (Stewarts) interview with Michael Lewis last night and I only partially wanted to throw something at the TV once or twice, but Michael Lewis was cool enough to make the interview not suck anyways.

    3. I’ve never liked Stewart. All his mugging and silliness to try to get his joke over, yuck.

      I think Colbert can be genius sometimes.

      1. His brother has done some legal work for me (for my company through me, that is), and I’ve only seen a clip from the show once (to see said brother). I watched The Daily Show back in the Kilborn days, but I never much liked it after Stewart took over.

      2. 1% genius, 99% tiresome, self-conscious asshole.

      3. Colbert can be a comedic genuis fo sure. But I hate the “100% strawman all the time” method of argumentation. Even when I laugh at it, it ends up feeling dishonest amd slimy after a while.

        1. Colbert’s stuff in Strangers with Candy was sublime. I think he does great in small doses but lacks the firepower to do a 30 minute show every day with all the obvious jokes and all the flaccid political commentary.

          1. He was good as the voice of Professor Impossible.

    4. Anybody here used to really like the Daily Show as long as they were making fun of W et. al. but now can’t stand it, because all they seem to do is defend and felate Obama?

      I don’t even Tivo that shit anymore. Used to love it.


      My DVR is now set to ‘Meh’.

  15. Well, his thing is caricature so he kind of has to do the hyperbolic straw man thing…

    1. Ya I know. It is an inherent limitation to the form, I can put up with it for a while. But there is more to it than that.

      For example, when Madeline Albright was on I was hoping for “I understand you were one of the few democrats who helped us getting a head start on killing Irqaqi’s with your sanctions programs, so I’d like to thank you for your service to our country”. Now THAT would be cutting edge and speaking thruth to power and playing his character. But that would make a Democrat uncomfortable, and we can’t have that. When the straight forward straw man doesn’t advance a hip mtv leftism, the straw man is mutated in order to advance, or at least not hinder said mtv-leftism.

  16. Maher is not funny, nor is he bright. He got lauded by people who thought he was so “independent.”

    Independent of talent maybe…

    1. Hopefully those people are disabused of those opinions after his documentary on religion. That was unbearably tedious and pointless.

    2. Best description of Maher I’ve heard was “dorm room democrat”. Smug, know-it-all, amused by all the little brains that don’t have his brilliance. Bad enough in the dorm room, pathetic for a man in his 50’s.

  17. Oooooh, goody, another thread where our right-leaning members can try to convince us why the GOP is our only hope (Obi-Wan) for smaller government!

    1. And where exactly, Paul, does anyone in this thread or Welch claim the GOP is our only hope? WTF are you snorting through your asscrack!?

      1. Um, Galt1138b, welcome to the board, dipshit. Clearly, you’re new here.

        First, you retard, I never said Welch or Reason staffers support the GOP.

        Second, dumbass, if you spent any time here, you’d get to know which regular commenters think the GOP is our only hope. See below, you asshat. Spend some time here before you act like you own the place.

        1. Settle down, broski. You’ve been on these boards as long as me. Probably longer. Nothing helps anyone’s understanding or causes anyone to laugh by calling out people’s obvious slants. John=right wing. MNG=left wing. Yawn.

          1. I tried sublety, but it wasn’t working. My next tactic: link to actual threads of regulars defending the GOP as the “libertarian future”.

            You can lean an internet commenter away from Magic The Gathering, but you can’t make him… you know the rest.

            1. lead*

              Although lean could work as well…

              1. Considering I am from MS, the state with the highest obesity rate, I did in fact get it. I was just to busy eating a couple of cheeseburgers to reply earlier.

    2. I’m not one to “lean” either way, but right now what exactly is our alternate option?

      As was noted above Christie is one of the few politicians who are telling it straight and he sure as hell isn’t a democrat.

      If you have some other options I’m all ears, but I will vote for whoever will stand up to this madness and try and stop this runaway spending train before our whole national economy resembles the clusterfuck that is California.

    3. Gridlock is our only hope, which means that the GOP makes sense this year. Next election, maybe not.

      I wish one could simply click on a gridlock option, which would allocate votes accordingly.

  18. Being from Chicago, I can say the problem is not unique to California. I just got this in my email from Crains Chicago Business. The top 5 Employers in the City of Windy Politicians are: 1. The US Federal Gov’t; 2. The Chicago Public Schools (“CPS”); 3. The City of Chicago; 4. The State of Illinois; and 5. C[r]ook County.

    This is nuts. We live in country where none us can afford the government we have. How can we turn the tide. I’m very skeptical of republicans.

    Anyways, Crains link is here:…..KJyF3ZKmUM

    1. It’s not unique to anywhere.

      It’s over. We’re Europe. Get over it.

      1. It would seem that way. I really just don’t want to take such a fatalist approach.

        How is life in Texas these days?

    2. What’s really scary is that the State of Illinois is the number 4 employer in Chicago, and the state capitol is in Springfield.

      Sooo glad I left Chicago after that

      1. I was curious about other places.
        Here is Crain’s New York on the NYC’s top employers:…..5XdCS9WlGU

        Figuring NYC and LA had to be as bad as Chicago, but it doesn’t appear that way. At least, it doesn’t appear that bad initially. More research is needed on NYC and LA because those cities have political cultures just as shady as Chicago’s.

  19. This really is the time when jobless American or any citizen and legal resident needs be a member of RECLAIM AMERICAN JOBS caucus. Only together can we stop this travesty of our immigration laws? Whatever our party consideration, we need to make it clear to all politicians that America belongs to THE PEOPLE-not to the open border demented fools, pariah businesses or the politicians themselves. There are three main enforcement tools within the United States. E-Verify, 287(g) local police alien enforcement and ICE raids. Reps. Lamar Smith (R-TX), Gary Miller (R-CA) and Sue Myrick (R-NC) have formed the Reclaim American Jobs Caucus to raise public awareness of the connection between illegal immigration and unemployment. To pressure the Obama Administration to vigorously enforce the laws against the employment of illegal aliens, work to implement legislation that will protect U.S. jobs from the impact of illegal immigration (especially to make E-Verify mandatory) Working to defeat legislation that will put U.S. jobs at risk from the impact of illegal immigration (especially to defeat amnesty.)

    The Tea party movement have many objections to the Republican usurpers and the majority certainly don’t agree with Dick Armey. But then Steve Poizner would be a great win for California, as he promised he would halt the draining of public entitlements to illegal aliens and give full reign to ICE to investigate and place in detention the millions of foreign families living illegally there. Certainly Governor Schwarzenegger did nothing and allowed this epidemic to spread statewide. California taxpayers have been shoved to the back, when they voted for Proposition 176–eliminating benefits to illegal families. The schools system has slowly deteriorated to the bottom rungs of performance with crammed classes of illegal immigrant children and the inability of teachers to offer a decent education to the offspring of American parents. In the last decade the prison system has been the place of last resort, for the rising crime rate of illegal immigrants from across the globe. Border state hospitals including California are overrun by illegal alien families who cannot afford to pay, leaving the bill for the taxpayers to collect the tab.

    Go to to learn the ropes. Don’t forget to call your Senator or Representative at 202-224-3121. Don’t forget to give your state incumbent lawmaker an ultimatum; NO RE-ELECTION VOTE. We are a sympathetic people, but Americans must come first and any lawmaker who represents the illegal immigrant, must be kicked out of office. This is not mean-spirited, this is survival of our nation, our flag and our language. American jobs for American people. Learn about the rampant corruption at OVERPOPULATION is another hidden issue, that will cause major environmental problems by 2040.

    No copyright for comments, blogs or articles. Distribute it to the people. copy and paste.

  20. For interested parties a new caucus is being formed called , “RECLAIM AMERICAN JOBS.? The American people need to fight back against the illegal immigration occupation, before it too late. Our nation is suffocating under the relentless invasion, that our politicians have ignored for decades. For reasons beyond most peoples understanding, they have blocked any successful way of restrictions of foreign nationals, that have swarmed into every community in this nation. The numbers from government sources and other biased sources proclaim there are only 10 million, with numbers dwindling. However nobody in there right mind believes these numbers, as they have drudged up consistently over the last 10 years ago, without any change.. Tuscon Border Agency says for every one person, that is apprehended 9 disappear into our country. My guess by that, the numbers are infinitely far more. In the neighborhood of 20 to 30 million. 8 million illegal workers at the least escaping detection in the job market and that’s why we need E-Verify?

    Perhaps that is why our government has sided with the business sector, to just identify–ONLY–new hires. Therefore, millions are not discovered, because they are already working somewhere.undetected. Federal, state county and city don’t want you to know, who has already slipped past any enforcement process. I suggest that’s why E-Verify has become a menace to corporate welfare. But E-Verify had gained plenty of momentum, and the Democratic leadership led by Sen. Reid, Speaker Pelosi couldn’t slip it past public awareness or popularity amongst HONEST BUSINESSMAN. Even Republicans cannot shift the whole blame on Democrats, as equal indifference must be attributed to both politico’s.. Of course we always need exceptional highly skilled engineers, scientists, technical personnel, but we certainly do not require semi-skilled workers, or non-skilled, low income, poor foreign nationals who will become a public taxpayer charge, as it is now?

    Now we the American people must contend with another Amnesty, Assuming President Obama can force it through. but who pays for the millions already here, or those who try to slip past before the signing. Another amnesty just means more will try to get here, thinking a third will be past at some future date. Not just the overworked border agency, but expired tourist and students at airports. So much is involved in processing new immigrants, that the whole weight falls on the taxpayers. Once here they can sponsor more family members, including those who would spend uncompensated time in emergency rooms. Another burden for luckless taxpayers. Just read the predicament the Sanctuary State of California. http://mexicanoccupation.blogs…..under.html

    1. Thanks Brittanicus for reminding me why I don’t vote for republicans. There are plenty of good reasons for wanting to regulate immigration. However, that illegal immigrants are “stealing” jobs is not one of them. In fact, immigrants have a strange knack (ie. Google co-founder Sergey Brin) for creating wealth and jobs. Good grief! Conservatives who argue that illegal immigrants are “stealing” our jobs have fallen in love with this childish belief of the zero-sum economy. The same childish belief that too many liberals have fallen for.

    2. Game, set and match?

    3. Hey Brittanicus; while you were busy pasting Buy American stickers all over your bumper, I was pursuing contract work with companies in Europe. That’s where all of my money comes from.

      So what are you doing for your country, besides jumping up and down and screaming KEEP THE SPICS OUT?

      If you don’t want immigrants to come here, your first job is to convince alot of lazy Americans that they’re not too good to do certain jobs; it’s not an immigration problem, it’s just a simple case of supply and demand. We don’t have a jobs problem in this country — we just have alot of people who are too proud to get their hands dirty; and a government that is all too eager to help them continue to believe that’s a realistic way to approach life.

      Oh, and one other thing: you might want to reconsider your light usage of the word occupation; back in the day, there was this little conflict called, depending on who you ask, either the Mexican-American War, or the American Invasion of Mexico. So, who are the occupiers, and who is the occupied?

      1. it is supply and demand and there has been an oversupply for 30+ years now. My grandpa was a front desk man for a grand hotel for 56 years and was able to buy a home and send his two daughters to college. Sure it wasnt a glamorous job but it wasnt a job that paid mcdonalds wages like they are now and why is that? money talks and if a business owner can get his hands on cheap labor, and i dont care how gung ho american he is, he will go ahead and hire the cheapest labor he can get. another problem is now instead of just unskilled labor it is now being overrun with skilled labor. ever seen the pay of a microbiologist who holds a bachelors? take a look its sad.

        as for mexico itself they have these most lazy work ethic ever and how do i know because i have “well to do” family across the line who would never dare change a light bulb that goes out in their homes because it would be beneath them to do so. they pay anyone to do their work for them and drop their titles like its the greatest thing.

        i blame the current establishment of both parties for basically cutting the cajones off the of american work ethic of getting your hands dirty making something of yourself.

        1. It has little to do with parties and more with a general internalization of the idea that a person deserves one particular thing or another. An education, no matter how much effort it entails, does not entitle one to any particular thing; it is one of the means to increasing one’s chances of acquiring it, but it is no guarantee. You speak of your grandpa’s situation, but ask him what his grandpa expected, in terms of standard of living — if he was like mine, he was probably busy spending his life savings to ship himself over to this country in a manner that would make one jealous of a sardine. So it’s really all a question of expectations, preconceived notions about what you deserve, and how those biases affect your decision-making. If a person’s expectation rules out working in entire segments of the economy, he may well find himself unemployed, so long as there are other people, whether from this country or another, who aren’t so proud.

          From the perspective of an employer, the question is answered before any patriotic notions even enter the equation. The scenario is a simple one: on one hand, you can be what might be considered a standup guy, and on the other, you can choose to remain in business. That’s the nature of your choice, assuming that your industry isn’t populated entirely by angels incarnate; as this is most likely not the case, it shouldn’t take you long to realize that high-minded ideals alone won’t keep your doors open. When you fold, all of your employees are out of luck, whether they are legal or illegal.

          People also seem too apt to forget that there are two sides to the coin; a business does not exist to provide jobs for its employees, but product for its customers. Oftentimes, we consider only the employee side of the equation, without acknowledging that those employees are also customers. Net productivity gains can be cast as harmful to the employee, but never forget that the purpose of working in the first place is not to have a job, but to produce; more [n] produced means more [n] for people in general, at a lower price. Extrapolate to the two extremes and see whether you consider the employee’s status as more important than the product. Hint: infinite wages == zero production, while infinite production == zero need for wages.



  22. Well, since Brittanicus is using walls of text I might as well go full retard as well . . .



    1. You’re doing it wrong, Naga.

      ChemTrails! GovernmentConspiracy! TertiarySyphillisAteMyBrain! IllegalImmigrants! PopTarts! ProjectOrion! PopTarts!

      It’s all in the capitalization and spacing. Caps Lock is just so jejune.

      1. pleasegodstopthepeopleinmyheadtheyblowupmycountrywithcrazyotherness

        1. Interesting. I applied the same response to your post as I do with my girlfriend. I simply nodded and said(under my breath of course), “I just do what the voices in my girlfriends head tell her to”.

          1. It’s the wisest course of action. Of course, in my case, I was just illustrating how ineffective capitalization, spacing, and punctuation are in insane rants.

  23. Say. Where are all the conspiracy douches? It’s almost like they are repelled from this site these days. What gives O Mighty Reason gods? Have you developed a good filter or something?

    1. Outside of this blog, we’re considered conspiracy nuts just by virtue of being libertarians.

      1. That’s what they want you to think.

  24. Notice how the assumption is that an economic downturn cannot be reversed without all of the “services” provided by the government. Just to give a few examples: unemployment needs to be extended but wages can’t be cut’ dregulation is out of the question; as is lowering taxes; all of these would promote hiring but encouraging the private sector to grow is less important than keeping the state alive.

    A real way to provide these services would simply be to have a computerized on-line welfare application form. If you qualify, the check is sent directly to you. Then all of the paper shufflers can be sacked- thus saving the states salary, benefits, etc. If they couldn’t find work, let them go on welfare- which would be a net gain, as their welfare payments would be below their current salaries.

  25. power balance is Performance Technology designed to work with your body’s natural energy field.

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