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No Bailouts for Corrupt Blue States That Keep Running In the Red

California Gov. Gavin Newsom listens to a question during an interview in Sacramento, Calif., Tuesday, Oct. 8, 2019. Newsom said President Donald Trump should be removed from office by Congress, but with Republicans in control of the U.S. Senate the best way to boot Trump from office is at the ballot box. (AP Photo/Rich Pedroncelli)

Once in a lifetime, and sometimes not even that often, a crisis comes along that requires extreme measures.

We’re living through one: COVID-19. In just a few weeks it has devastated our economy. Fully 38.6 million Americans are out of work. Thousands of small businesses are going to be eliminated. The federal government is throwing money around to bail out everyone in sight, and will have to keep doing that for the foreseeable future. We are already on an unsustainable path, as I’ve repeatedly written.

One budget analysis recently estimated that the federal budget deficit for 2020 could reach $4 trillion, up from what had been estimated at $1 trillion. That’s an unthinkable amount of deficit spending. And while it may be necessary, we should be finding ways to reduce waste so we can focus all our deficit spending on COVID-19 and its economic effects. That is, after all, the unforeseen crisis we’re dealing with.

At a time like this, federal and state subsidies for wasteful programs simply have to go. Blue states are angling for federal bailouts paid for by the rest of the states. They should not get them.

California Scheming

California, for instance, has an unfunded liability of its pension system of over $1.3 trillion. When you add the nearly $500 billion in outstanding bonds, state taxpayers will ultimately have to fork over nearly $2 trillion to cover the costs, which will only increase in the coming years. At the same time, Gov. Gavin Newsom is keeping much of the economy closed and is demanding millions in federal funds be given away to illegal immigrants.

Illinois has become the expert in the art of spending other people’s money. In mid-March, the president of the state’s senate drafted a letter to congressional representatives. The state needs, he wrote, $40 billion in federal bailout funds. He blamed the COVID-19 pandemic. However, a quarter of the money he wants would be used to bail out the state’s pension fund, which was already broke long before the outbreak. Talk about not allowing a crisis to go to waste.

And yet, while the state makes this financial ask in the name of protecting its residents, it continues to work with one of the state’s biggest lobbying powerhouses on a scheme to impose additional hidden taxes on their behalf.

Crony Corruption in Blue States

Exelon, a billion-dollar energy company that operates within the state, is currently in the crosshairs of federal agents, who raided the offices of key players in the Illinois Democrat political machine to see if they helped Exelon with corruption and rate hikes. But that hasn’t stopped the company and its friends in the legislature from working on implementing more anti-consumer giveaways over the next two weeks.

The corruption in question can be found in the Clean Energy Jobs Act, and it would be the second bailout the company has received in less than five years. It would allow the company to qualify for more ratepayer-financed subsidies, called Zero Emission Credits (ZECs), which some industry experts have found “condone massive wealth transfers from Industrial Customers and other consumers to owners of generation plants that the FERC-regulated wholesale market has determined to be inefficient.” That’s just a wonky way of saying higher utility bills on businesses and families to support more costly energy suppliers.

Other states are operating no differently from Illinois. They want more taxpayer funds from the federal government while they continue to plow ahead with the same costly, anti-consumer agendas that put their energy, union, and other lobbyist buddies before the needs of their constituents and the fiscal health of their states.

COVID-19 Relief Yes, But No Bailouts

If Congress wants to implement a payroll tax holiday or other means of temporary relief to help them get back on their feet, fine, tax cuts are just about always the right thing to do. But if Washington hands these states the financial gifts they have requested, if Congress finds more genies hopping out of Christmas trees for the blue states running in the red, those states will have little incentive to stop the reckless tax-and-spend, tax-and-subsidize business as usual for their corporate cronies.

So they won’t. Ever.

The red states (and moderately-run blueish states) must have a Picard moment and draw the line:

Or Illinois will still continue to enrich an energy conglomerate being investigated by the FBI; California will still want taxpayer dollars given away to political cronies and non-citizens, and New York will still kowtow to the union lobby while spending like there is no tomorrow. And all of them have botched their responses to COVID-19, endangering their own citizens and the rest of the country.

Enough is enough. States that manage themselves well should not be forced to bail out states that refuse to, not in this crisis, but in the decades that came before.

Governments should be slashing waste after COVID-19, not increasing it. Here’s hoping the legislative branch takes a stand for fiscal conservatism by not taking the bait.

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