BLOGS FROM SIDNEY

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Sidney

Deficit Spending: The Other Immigration Problem

Blog From
March 2nd, 2011

We are inundated on what seems like a daily basis with information and proposals on the illegal immigration problem. And it is huge a mess. Annually, illegal immigrants cost taxpayers over $100 billion with no end in site. While Congress kicks that one around like the political football it’s become, few are paying attention to the other immigration problem occurring within our borders. That one makes our territorial boundary woes look almost penny ante by comparison. While this other problem should, in theory, be easier to solve, we aren’t making any headway there, either.

Residents of states that have been particularly irresponsible with their money are migrating to states with sound fiscal policies. This internal migration to sunnier financial climes is creating an even bigger problem for us than the flow of illegals into our Country. Don’t get me wrong. The lid on the illegal immigration can of worms has to be snapped shut. But, the dilemma of internal immigration has a much greater negative potential: the economic decimation of large portions of our Country’s map.

Take the sovereign State of Illinois. Obama’s stomping grounds is in the worst financial shape of any of the red inked Federated Fifty. In January, the day before the new legislature was sworn in, the lame ducks passed a massive income tax increase. They raised the rate by two-thirds over the existing level. Rather than pare down spending, which has amassed a debt equal to half of the budget, lawmakers laid the burden of their irresponsibility on taxpayers. As one observer noted, the Illinois legislature has been a huge boon to Florida. The latest tax increase is expected to motivate a new wave of immigration to the southern State.

Sitting just a few rungs below Illinois in the list of states with the bleakest financial outlook is California. It’s the not so proud parent of a bouncing $25 billion deficit. In January, Governor Jerry Brown proposed a budget that would balance the State’s ledgers for the first time in a very long time. If Brown gets his way, the axe will cut deeply into several sacred cow services including welfare and education. Temporary tax hikes, enacted in 2009 and set to expire this year, would be extended for five years. But, the Governor’s proposal, due for a vote in the legislature later this month, is facing opposition from both sides of the aisle. Even if it passes, voters in a June special election must approve the tax hike extensions.

Rounding out the top ten of the most fiscally unfit are New York, Connecticut, New Jersey, Louisiana, Mississippi, Ohio, Massachusetts and Wisconsin.

Why are these states in financial trouble? To be sure, the recession is part of it. But, it only accelerated the inevitable financial meltdown of governments with a long history of spending like there’s no tomorrow. Not coincidentally, the ten worst favor public unions and large welfare programs. Even though their individual tax rates are among the highest in the country, they’re not high enough to finance the largesse flowing from public coffers. Making matters much worse, fiscal failure inevitably drives the tax base out, reducing the amount of revenue even high taxes generate. And it’s not just people who are splitting to friendlier confines. California, for example, has witnessed a long line of businesses bolting from the State like the Israelites fleeing Egypt.

Deficit spending is a sickness, an addiction its junkies cannot overcome. In the same bill that increased taxes in January, the Illinois legislature reduced spending not at all. Instead, it capped increases in future years at 2% per year. With their dying breath, and over voter objections, the lame ducks shot up one last time. How sick is that? We just can’t get rid of them fast enough.

I’m betting that the June election in California will validate Brown’s fiscal solution. Taxpayers can swallow a tax extension a lot easier than the bitter pill of state insolvency. Maybe the migration will stop for those willing to take the pain to restore the gain.

See you on the left side.


 





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