The New Costs Of Blue
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  • dearieme

    As I understand it, States can’t go bankrupt, but don’t need to since they have Sovereign Immunity. Lower tiers of government can go bankrupt. My question: does bankruptcy of a lower tier of government ever result in liabilities floating up to the state level?

  • Richard F. Miller

    Professor, a technical point with large implications: the logic of Simpson-Bowles, which will have to adopted in one form or another, ultimately leads to a repeal of the biggest subsidy ever to state and local governments: the exclusion of muni-bond interest from income (although still includable in some AMT calculations.)

    This eventually must happen, especially if a “post-Blue Model” tax code is adopted (a drastic lowering of brackets in return for the elimination of line item deductions.)

    Don’t think this scenario is fantasy. Just this week, the Obama administration, hungry for revenue, floated a trial balloon suggesting that such interest be partially includable in gross incomes above $250,000.

    It’s just the beginning, Republican or Democrat.

    • Walter Russell Mead

      @ Richard F. Miller: a very important point. Investors should take note. Presumably the smartest ones already have.

  • Jacksonian Libertarian

    The Blue Beast is now living on borrowed time.

  • WigWag

    Note to Professor Mead.

    With all due respect, repeating yourself in post after post does not exactly qualify as gripping commentary. When the posts in question are light on detail and heavy on bloviation, the problem is exacerbated.

    Producing copy several times a day for fans voracious for the product of your fecund mind must be difficult. But put yourself in the place of a reader of your blog; unless you actually have something new to say about the blue state model or unless you have some genuine data that serves to verify your point of view, why say anything at all? You reach a point where your commentary on the subject fails to shed any light and merely becomes tedious.

    Surely you must have something new to say about this subject; if not, my suggestion is you move on to one of the many other subjects where your point of view will enlighten your readers rather than put them to sleep.

    I am not trying to be unfriendly but any devoted reader of your blog has read the contents of this post 20 times already.

    • Walter Russell Mead

      @ Wig Wag; following a major historic shift as it unfolds in the daily news does not feel like repeating myself endlessly post to post. It is true that I have said more than once that the blue model is failing and that even its friends can’t help taking actions that drive it further into decline, but observing the stages of this development and helping readers think through the implications of each new stage seems to me like what journalism ought to do. My suggestion: skip the posts you don’t like, read the ones you do.

  • Anthony

    WRM, blue social model costs are indeed undergirding fiscal imbalance in many states. Yet outside of your focus, you find very few serious public policy gurus identifying blue model issues as signal to structural government fiscal/budgetary problems going forward. Why?

    • Walter Russell Mead

      @Anthony: look at my post on the crisis of the American intellectual.

  • Corlyss

    “jettison those which cost more than their value”

    Here in tiny li’l Nibley City, the fastest growing city in Utah and the US in 2008-9, the city government believes that one of it’s three raison d’etre is “promoting community” among the citizens. I think that came off a cereal box somewhere. We budget hawks can’t get the city to eliminate wasteful “feel good” [waste] like an annual summer Heritage Days celebration. We just assumed 3/4 of a million in debt to pay for a new city hall, one of whose alleged major selling points was that it provided a “community center.” Never mind that the “community center” in the old city hall was rarely leased out to functions. If I wanted community per se, I’d have my friends and neighbors over for dinner, go to movies with the girls, or go skiing with a church group. I’m not going to dink around with uninteresting programs the city provides. Services-happy city governments are a blight on tax payers, regardless of the size of the city.

  • Toni

    “States like California, Illinois and New York (America’s PIIGS)”

    We could call ours NYIC, pronounced “nyik.”

  • Anthony

    WRM, thanks for redirecting me to Dec. 8, 2011 post. I reread it and remember the “why” posed earlier. “America has everything it needs for success in the twenty-first century with one exception: a critical mass of thinkers, analyst and policy entrepreneurs who can help unleash the creative potential of the American people…” says it all – thanks again.

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