Bailout 102- Bailing out the states

Now that the auto industry has received its dose of federal life support, bailout attention has shifted to the states. One such request is for $1 trillion over two years, while other proposals approach $3 trillion over ten years. There are a number of reasons why “bailing out” states for their budget shortfalls is a bad idea, but I will focus on two. The first and most obvious is that it rewards fiscal irresponsibility. States that cannot manage their resources effectively get the most money from the federal government. What a concept.


The second reason is the most hideous. STATES HAVE TAXING AUTHORITY, which begs the question, why shouldn’t states raise their own taxes to pay for their own programs instead of asking the federal government to tax everyone and redistribute the revenues to the states? The problem is that fiscally irresponsible states cannot easily raise taxes to pay for all of their programs because doing so will drive out the producers—individual and business tax-payers—to other states. Moreover, states cannot print money, nor can they defer debt to future generations as easily as the federal government can.


Here’s the key point: SOCIALISM REQUIRES CENTRALIZED AUTHORITY. Because socialism drives out the producers (i.e., the taxpayers), it must be administered centrally so they cannot leave. A state bailout represents a transfer of wealth from more productive states to less productive ones. In this regard, leaving one state for another makes little sense if the taxes you pay will be redistributed across the board anyway. Hence, a “state bailout” is an egregious violation of the STATES RIGHTS principle so deeply imbedded in our Constitution and should be vigorously opposed.


For what it’s worth, my guess is that Obama will eventually give the states less than what they ask for and demand “future accountability” in an effort to appear moderate. Even entertaining such an idea in the first place, however, should place him on the far left, somewhere in Marx’s neighborhood.

5 thoughts on “Bailout 102- Bailing out the states

  1. The big problem with this is that it keeps politicians from cutting the programs they shouldn’t have in the first place. These governors need to wake up and face the music. Also, I heard you on Church–great job!

  2. I heard you today on XM. Very refreshing. All of this is extremely scary. I don’t know where this Sovietization of the US will stop. I wonder if we will see an eventual break-up of the states, especially if the economic situation becomes as bad or worse than that of the great depression.

    1. I don’t think we’re in for another Great Depression, but we could see a serious, extended recession…The socialism will end when 51% of the voters demand real change. It’s not too early to think about the next 2-4 years. We need to educate our friends and co-workers in time for the midterm elections, and then nominate the right candidate to defeat Obama in ’12.

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