If you were wondering about the state budget crisis and where all their money is actually going, this article from the Wall Street Journal give a good idea about it. And, if you think you’re getting less and less for your state tax dollars, well… you’re right about that, as the article points out. The sad fact is that more and more state expenditures are going to service debt at the expense of pension funds.
On a certain level, it’s not much different than a lot of households (neither of which can print money like the Federal government can) which are spending more on debt payments, particularly credit card debt.
There’s a crucial point that the WSJ doesn’t talk about, which is no surprise being that it’s the mouthpiece of, well, Wall Street, the very people and institutions that helped get us into this mess, and who are getting bailed out by our tax dollars, and that is that the bailout money should be going to the states, not Wall Street. As the article itself points out, the states employ a lot of people in the US, so laying them off only reduces the federal and state revenues, further deepening the recession.
So, what they don’t say is that we need to get back to a real program of economic development, like we had in the late 30s and 40s. At that time, Wall Street was on trial for helping to create the crash, not getting bailed out – a more sane approach to an economic crisis. Real production, real jobs and dignified wages will bring the states, and the country, back to prosperity.
That will create the surplus in the finances to fund pensions so people who can’t get a government bailout or a huge bonus check every year will have some safety net when they’re too old to work.
“Next month will also mark the end of the American Recovery and Reinvestment Act’s $480 billion in federal stimulus, which has subsidized states through the economic downturn. States have grown more dependent on federal subsidies, relying on them for …”