June 27, 2009

THE ALBANY-TRENTON-SACRAMENTO DISEASE:

President Obama has bet the economy on his program to grow the government and finance it with a more progressive tax system. It’s hard to miss the irony that he’s pitching this change in Washington even as the same governance model is imploding in three of the largest American states where it has been dominant for years — California, New Jersey and New York.

A decade ago all three states were among America’s most prosperous. California was the unrivaled technology center of the globe. New York was its financial capital. New Jersey is the third wealthiest state in the nation after Connecticut and Massachusetts. All three are now suffering from devastating budget deficits as the bills for years of tax-and-spend governance come due.

These states have been models of “progressive” policies that are supposed to create wealth: high tax rates on the rich, lots of government “investments,” heavy unionization and a large government role in health care.

And they’ve done badly. But well-connected politicos with “flexible” ethics have done very well, which no doubt accounts for much of their allure to similar politicos at the national level. . . .

UPDATE: Rand Simberg: Why not try the Austin cure?

But whatever you do, don’t emulate Illinois. “The governor’s attempt to create political chaos by placing high-profile, ‘feel good’ programs on the chopping block is disingenuous. By failing to address the state’s fundamental spending and inefficiency problems, Quinn is setting up Illinois taxpayers for even greater future fiscal disasters.”

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