Thursday, January 27, 2011

States’ Budgets

The Capital column in the January 27 issue of The Wall Street Journal discusses how the finances in so many states got so bad. There are four reasons: the recession drove down tax revenue, legislatures were profligate in the preceding boom, Medicaid costs are going up faster than revenues, and pensions have been systematically underfunded.

Keep in mind, that the main spending component of the Obama “stimulus package” was actually transferring dollars to state governments to spend.

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