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About Paul R. Hollrah
Paul R. Hollrah is a freelance writer. He is a member of the Civil Engineering Academy of Distinguished Alumni at the University of Missouri - Columbia and a Senior Fellow at the Lincoln Heritage Institute. He currently resides in Tulsa, Oklahoma.
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Economic Basket Cases
Paul R. Hollrah
April 7, 2012
The term “basket case” dates back to World War I when it was used to describe wounded soldiers who’d had all four limbs amputated. Since then, it has found its way into modern English parlance as a slang term, referring to one who finds himself in a “completely hopeless or useless condition.” (Answers.com) But now, in the early years of the 21st century, the term is most often used in connection with the economic condition of states, nations, and business enterprises, as in “economic basket case.”

What better way to describe the states of California, Illinois, and New York?

Because of its subtropical climate, its beautiful mountains and beaches, its fertile valleys, and the allure of the Hollywood film industry, California...with a population of 37.7 million...has long been the destination of choice for those in search of wealth, glamour, and the laid-back lifestyle. Although the people of Arkansas like to think of their state as the Land of Opportunity, it is California that has earned that title in the hearts and minds of most Americans since the gold rush days of 1849.

Illinois, with a population of 12.9 million is an agricultural-industrial state in the “rustbelt” region of the Midwest. Illinois is best known for its major population center of Chicago, its agriculture, its heavy industry, and its coal and oil fields. It serves as the major transportation hub of the central United States.

New York, with a population of 19.5 million, was for most of our nation’s history the major port of entry, the financial center, and the population center of the country. With its wealth, its cultural sophistication, its colleges and universities, and its entertainment industry, New York has always been seen around the world as the economic and cultural center of the United States.

California, Illinois, and New York are vastly different places, culturally and geographically, but they all have one thing in common. Because of many years of political domination by liberals and Democrats, they have all become emblematic of the term “economic basket case.”

On November 2, 2010, California voters had a chance to put their state back on the road to fiscal sanity. In the gubernatorial election they had a choice between former governor, former attorney general, former mayor of Oakland, Democrat Jerry Brown, and former eBay CEO, Republican Meg Whitman. To return California government to the hands of a free-spending, union-friendly Democrat like Brown, at a time when the only useful prescription for California’s future was strict austerity, made no more sense than to put Dr. Jack Kevorkian in charge of the “suicide watch” unit at the local psychiatric hospital. But that’s exactly what California voters did.

Now, two years later, former San Diego Mayor Roger Hedgecock gives us a report card on Brown’s efforts to rescue California. He tells us that California’s unemployment rate is now 12%, that California has more people on food stamps than any other state, and that California’s K-12 schools have more administrators than teachers, smaller classes with lower test scores, and twice the expenditure per student than 15 years ago. Brown has been forced to admit that the “balanced” state budget adopted 5 months ago is now billions of dollars in the red because actual revenues are billions short of the overly optimistic revenue estimates the Democrats used.

As more and more businesses pack up and leave the state, taking their jobs with them, and as more and more of the middle class and the wealthy look elsewhere for “greener pastures,” Brown has announced a plan to solve the problem. With the top 1% of wage-earners already providing 50% of the state’s revenues, Brown proposes to do what Democrats can always be expected to do. He proposes to increase taxes by 2% on those with annual earnings of more than $250,000, bringing the top state tax rate to 12.3%. He also proposes to increase the state sales tax by one-half-cent, bring the sales tax to as high as 10% in some cities and counties.

But, as it turns out, Brown is the conservative in the overall scheme of things. Hedgecock tells us that liberals and Democrats are circulating 5 other tax increase measures for the 2012 ballot, all more burdensome and more regressive than the Brown proposals.

In Illinois, where the state began calendar year 2011 with a budget deficit of $15 billion...equivalent to more than half the state’s general fund...the Democratic Governor, Pat Quinn, and the Democrat-controlled legislature consulted the Democratic playbook and came up with a solution that only a bunch of Democrats would consider a good idea. In the midst of a major economic recession, they increased personal income taxes by 66% and corporate taxes by 46%, increases that were expected to produce an additional $6.8 billion per year...assuming, of course, that every employer currently in Illinois, would remain in Illinois.

But things have not worked out as expected. After Democrats in Springfield loaded massive new taxes on the shoulders of taxpayers just one year ago, the Illinois Comptroller’s Office estimates that the backlog of unpaid bills is now nearly $8 billion. But Illinois Democrats have found a way to fill part of that gaping $8 billion shortfall. On Sunday, March 25, Illinois became the first state to sell individual lottery tickets online, making it far easier for those who can least afford it to gamble away money that would otherwise be used to provide the necessities of life...food, clothing, and housing...for their families.

According to a report in USA Today, “Illinois Lottery Superintendent Michael Jones says online sales could attract 1 million new players when MegaMillion payouts exceed $100 million...Only 9-12% of Illinois adults play now.”

Beginning on March 25, visitors to illinoislottery.com were asked to register and enter credit card and Social Security numbers, date of birth, name, and address. Sophisticated software is designed to ensure that only Illinois residents 18 and older play. In the interest of protecting the interests of the poor and needy, Democrats have limited purchases to $100 a day.

Meanwhile, news reports tell us that, between Friday evening, March 16, and Sunday evening, March 18, Chicago police reported 10 homicides in the city, while 39 others were seriously wounded by gunshot. As the poor, homeless, and unemployed spend more and more of their limited resources on Internet gambling, those statistics can be expected to grow and grow as gamblers seek to cover the cost of their gambling addiction.

In New York, Democratic governor Andrew Cuomo has won an epic battle against the public employee unions. After having initially proposed a plan to save $113 billion in public employee pension costs over 30 years, the New York legislature passed a bipartisan bill that is expected to save taxpayers some $81 billion over 30 years, including $21 billion in New York City alone.

According to a March 21 report in the New York Post, “Albany hath no fury like union bosses scorned...Their spitting mad vitriol means sacred cows have been gored, if not slain. Under the threat of ‘serious consequences,’ the president of the Civil Service Employees Association thundered that the union ‘will immediately suspend all state political endorsements and contributions...’”

The Post reports that House Speaker Sheldon Silver attempted to get just enough votes to pass the reform package among Democrats and then add Republican votes as needed. After lining up 56 Democrat votes...with 12 defections...he needed 20 Republicans to reach a simple majority. When the final tally was announced he had a total of 93 votes, having attracted 15 more Republicans than necessary.

Clearly, Cuomo underestimated public concern over state finances and the extent to which voters have had their fill of the public employee unions.

These three states, combined, have an estimated population of 70.1 million as of July 2011, or 22.5 percent of the total U.S. population? They are emblematic of state governments that have been far too cozy with their public employee unions...a system in which Democratic politicians cause state bureaucracies to grow and multiply, which in turn causes public employee unions to grow and multiply, which allows the union leaders to collect more and more dues money, which goes to elect more and more Democratic politicians, which causes government bureaucracies to grow and multiply...and on and on. It is a form of institutionalized corruption that can only serve to destroy representative government.

Like their counterparts in Washington, Democrats in state government have chosen a course that will ultimately lead to bankruptcy and the abrogation of public employee union contracts. When that happens, the unions and their Democratic enablers will expect the taxpayers in Republican-dominated states to come to their rescue. But that’s not going to happen. Republican governors in state after state, working with Republican-controlled legislatures, have taken steps necessary to guarantee long term fiscal solvency. To suggest that they will willingly increase public indebtedness by another trillion dollars, just to save the Democrat-controlled states and their public employee unions from the results of decades of bad decisions, is insane. They’ve made their beds and now they’ll have to sleep in them. They’ll have to learn all over again...the hard way...what fiscal responsibility is all about.


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