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State "Recovery" is Figment of Blue Imagination


Blue model fans have been popping the champagne corks as the economic recovery boosts state revenues across the country. “What crisis?” seems to be the familiar refrain, as Democratic politicos in cahoots with public unions are already thinking up new social programs, new wage increases, and new pension promises.

But look a little closer and there’s much less cause for celebration. As the NYT reports (h/t Daniel Lippman), many of the budget surpluses being ballyhooed are far weaker than announced, as much of the “extra” cash has already been claimed by unfunded health care and pension costs. Talk of putting that money away for the next rainy day or spending it on new programs is largely laughable, given how many unpaid bills these surplus states still have.

California, for example, expects a surplus of $1.2-4.4 billion this year. This is good news not for taxpayers but for the state’s teachers’ pension fund, which is owed $4.5 billion in unpaid promises. Gov. Neil Abercrombie (D) of Hawaii claims to have turned a $200 million deficit into a $300 million surplus, but his state remains a whopping $13 billion short of promised health care costs to retired workers. Even red states like Texas are locked into rising pension and health care costs and commitments that are set to eat up any new revenue: last year, Texas contributed less than half of what’s needed to fund state worker pensions, and more than half of its new $8.8 billion surplus is needed to pay Medicaid costs.

For all the talk about taking apart and reconfiguring the Republican Party, the real root issue in American politics today is the inexorable fact that blue model governance is economically kaput. That fact is dividing the Democratic Party into reluctant reformers and math deniers, and driving state politics into an accelerating reform process in red and blue states alike.

A few years of budget cuts and economic improvement is not going to dig us out the hole we dug for decades. Incremental, purposeful reform over the course of many years is the only path to recovery.

[Cracked America image courtesy of Shutterstock]

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  • Hominid

    Yeah, but the news cycle has moved on to juicier topics. It’ll get back to the pending fiscal collapse when the scandals cool off.

    • Vivian Bennett-Cohan

      Scandals need to be talked about yes, but this Obama ecnomomy sux.

      • bpuharic

        It’s a Bush economy. As Reinhart and Rogoff showed, the type of wide scale economic destruction caused by 30 years of right wing policies takes at LEAST 5 years of recovery. Too big to fail, AKA ‘supply side economics’ gave us this economy. You conservatives own this.

        • j011254

          Obama’s failed economic policies are plain for all to see.

          • bpuharic

            And they’re so plain to see you haven’t told us of any

            Vs the robust supply side destruction engineered by conservatives during the Bush years which caused the recession of 2007. The 20,000% run up in credit default swaps between 1997 and 2007, for example. THAT is a specific failure of supply side/right wing economics.

        • Dan045

          Bush was a big gov social conservative (meaning he was Pro-Grow-the-Gov and Pro-Life).

          Obama is a big gov social liberal (meaning he’s pro-grow-the-gov and pro-choice).

          For the economy, there isn’t much difference. Obama is like giving Bush 8 more years.

          • bpuharic

            Other than the minor detail Bush led us into the biggest recession in 80 years while the economy is growing…slowly…under Obama

  • StepMJohn

    No private sector business could get away with the accounting methods that both federal and state employ. Yet the government is always calling for “greedy” companies to be taxed even more.

    Read any cooked books lately? The government keeps putting them out. And the books aren’t well-done.

    • Joel0903

      Yes, but, unfortunately, they aren’t – like a good steak – rare either.

  • LuapLeiht1

    None of this is going to change until the Baby Boomer generation retires from politics. Until then, it’s patch, patch, patch and hope the entire system doesn’t blow up in our face.

    • Joel0903

      That’s 20 years away at least. If the pressure isn’t kept on their replacements, we’ll just end up with more of the same – as usual.

      • Vivian Bennett-Cohan

        I don’t see a victory. We have too many John McCains who want to cave/ side with the liberals.
        Its not going to work…

    • Vivian Bennett-Cohan

      I put the blame on LIberalism. They want America to become dependent on Welfare and big bro gov… Its happening.
      Just like communism, socialism, marxism… Liberalism is destroying us.

      • bpuharic

        There should be a new version of Godwin’s law for those who call any policy they disagree with ‘marxist’.

        • Phil Horton

          Actually, Obama’s mode of operation uses some from all of the failed or proven immoral ideologies/regimes. Don’t forget Fascism. The way he makes backroom deals with big business, the way he tries to control the media, the way he bullies and tries to destroy his opponents or using his term enemies.

          Remember when he ran in 07, he talked about organizing young men neighborhood military groups. Right out of the Hitler playbook.

          • bpuharic

            Backroom deals, like when Cheney pow wowed with Exxon to develop our national ‘energy’ policy?

            You right wingers with your breathless hysteria…everyhing is nazism or communism or fascism.

            Is there any conservative who’s NOT a ranting lunatic?

  • bpuharic

    What is a ‘blue state model’ and how is it ‘kaput’? Is an economic system based on minimum wage jobs and rent seeking the bold new future for America? An economic system where the middle class experiences decades of wage stagnation while the Gini coefficient rapidly approaches 1?

    When one reads the moderate analysis of Paul Krugman on economic growth and deficits, there’s a much more..ahem…balanced approach to economics that does not rely on buggering the middle class to build the country.

    We need higher taxes on the wealthy, including capital gains taxes, and taxes on carried interest. We need to stop tax expenditures, including the implied subsidies to the financial sector amounting to $100B from ‘too big to fail’. We need to encourage wage growth among the middle class to build demand. The right seems to have forgotten the DEMAND side of ‘supply and demand’, relentlessly focusing on the myth of supply side economics.

    Our economy shows the results.

    • Vivian Bennett-Cohan

      All I had to hear was you say “MODERATE KRUGMAN”.. And I see where your brain is..

      • bpuharic

        An ad hominem comment is relevant how?

  • Vivian Bennett-Cohan

    There is no recovery. Its all a big farce.. As long as we remember that, we will be ok.

    Obamas economy. Lets not forget who got us into this mess.

    • bpuharic

      The recession started in Nov 2007. Obama took office in January 2009.

      Seems VBC thinks Obama had a time machine.

      • j011254

        Let’s not forget that the Obama Administration declared the recession over in June 2009. Yet tens of millions of Americans are still without jobs.

        • bpuharic

          We were losing 800,000 jobs a MONTH on Inauguration day. The recovery has not been great but given the devastation of ‘supply side’ mythology we should be thankful for any jobs at all.

          • Dan045

            So the economy is still Bush’s fault? Even with a super majority in his first two years, Obama can’t be blamed for anything?

          • Snickersz

            How could Obama be blamed for anything? We had recovery summer, didn’t we?

          • bpuharic

            Again the right confuses dogma with facts

            Obama had a supermajority for 7 months, between the election of Al Franken, and the death of Ted Kennedy

            Talk radio propaganda seems to have replaced logic on the right

          • Dan045

            Ya, point, he only had a super-majority for 7 months (far more than most Prez ever have). But then most leaders have enough skill to get at least one opposition party vote. It was almost like he had no experience in governing.

          • bpuharic

            Or that he faced an extremist right wing opposition.

            Which, of course, he did.

          • Dan045

            It’s the job of the opposition to oppose.

            In the aftermath of the election, the GOP was deeply unpopular and weak. They’d just lost big, and it was felt they’d deserved to. Bush was their standard and the standard sucked.

            I can’t picture the GOP as being so competent that they can prevent any of their diverse membership from voting for something.

            The office of the Presidency has gobs of power, previous Prez have proven that, the last time we had someone complain about how weak the office is, Reagan showed that Carter’s problem was incompetence. This very much seems like a repeat, especially given Obama’s total lack of experience or history of competence. IMHO, Hillary would have gotten the votes.

          • bpuharic

            They’re very competent in being radically right wing. Shall I post the references or would you prefer to google it yourself? The current GOP is one of most extreme radical rightwing parties in the western world and has gone far more right than the dems have gone left

          • Dan045

            Nothing you said disagrees with anything I said. Yeah, it’s to be Prez, probably harder than it was. And yeah, the House is further to the Right (the Senate is more moderate).

            But, given that being Prez is hard, why should we expect good outcomes from someone with a total lack of experience or history of success?

            How well would a random person do on any professional sports team? How well would someone with zero real experience do as CEO of a Fortune 500?

            Obama has done roughly as well as his resume suggested. This shouldn’t be a surprise, nor is it “all the GOPs fault”.

            The GOP didn’t create the IRS scandal, nor did it make Obamacare into a 20k page trainwreck.

          • bpuharic

            So the GOP controlled congress AND the presidency for 6 years.

            With all that experience they gave us the biggest recession in 80 years, a 2 trillion dollar war that killed 4400 US troops, the greatest concentration of wealth in the 1% in history

            Dunno about you, but the ‘experienced’ GOP right wingers brought us nothing but disaster.

          • Dan045

            That’s right, when the GOP controlled things, they didn’t fix Freddy/Fanny (they only tried after they didn’t have sole power). What they did do is grow the gov (a lot) and give us that drug plan and lots of debt.

            When the GOP is out of power they talk like they want to fix things, but when they are in power they govern a lot like the dems. And yeah, that’s a disaster.

            But Bush’s economic insanity doesn’t make Obama’s economic plans any saner. The single biggest problem we need addressing is entitlement reform, and Obama simply doesn’t want it. Politics trumps economics, but I think Obama is ignorant of the economics too.

            That 2 Trillion dollar war you’re talking against is beer money, i.e. close to meaningless in the larger numbers of the gov’s other various long term obligations, i.e. unsustainable entitlements.

            Our unfunded obligations is roughly $62 Trillion in today’s money. 2 Trillion is a rounding error.


      • ZiggyStardust

        Yep, right when the Dems took control of congress bp, you have blindly stumbled onto the truth.

        • bpuharic

          Shallowness of thinking is Gospel on the right. You conservatives destroyed the economy over the course of 10 years. Trying to slither out of your rapacious greed is not an argument.

          • Snickersz

            Did Uncle Barney Frank give you this shallow analysis?

  • Kuni Leml

    In what universe is the failed fraud known as Trickle Down “the Blue model”?

    We are living in an Ayn Rand economy, regardless of what Party is currently in charge.

    There is only ONE thing, i.e. the Blue model, which delivers a strong middle class and shared prosperity: Strong Unions, a very progressive tax system, and proper regulations vigorously enforced.

    • bpuharic

      Not to be too pedantic about it, but WRM identifies the ‘trickle down’ model in his own book, “Special Providence” as having its origins in the “Jacksonian” school of American politics…you’re absolutely correct it’s a social darwinist view that’s not rooted in sound economic policy.

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