Red States, Blue States and the Fiscal Cliff

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Richard Baris is a contributor to The Brenner Brief. His columns appear on Saturday.

The looming fiscal cliff has dominated the recent media coverage. President Obama seems to have been more than marginally successful in painting the Republicans as obstructionists who are willing to play chicken with our economy in order to prevent taxes from being increased on wealthy Americans. This story has played out repeatedly over the past four years, so you would think we would have been more prepared for this debate.

If we insist on continuing to debate President Obama on his terms, which is to say — engaging in hypothetical arguments with populous overtones, we can expect to be blamed when negotiations break down. We need to bring the debate back into the realm of reality.

Everyone remembers President Obama’s soaring speech about how there are “no red states or blue states,” but unfortunately for the Democrats, in the real world, there are. The contrast between the red and blue state models presents an enormous opportunity for the Republican party to sell their economic vision on a national level.

The recent study released by 24/7 Wall Street surveyed all 50 states to identify the best and worst run states. Out of the top five best run states (Nebraska, Wyoming, Nebraska, Utah, Iowa), only Iowa — which is currently run by Republicans — is a swing state. The majority of the bottom five (California, Rhode Island, Illinois, Arizona, New Jersey), as you might have guessed, are repeat blue state model offenders.

Interestingly, Arizona found itself ranked among the worst due to the 35 percent loss in home values it has seen as a result of the liberal policy-induced “great Recession.” With the exception of Arizona, there are undeniable commonalities among the states ranked the lowest.

Of the course, the most obvious similarity is that they are built upon the blue state model. However, in order to make a convincing national argument, we have to identify what policies are implemented in liberal states that make their model such an economic disaster.

Conservatives understand that massive government spending leads to insolvency. Liberal states struggle with unsustainable debt. Promises to labor unions and welfare programs have long been used to ensure a coalition large enough for the Democrat party to remain in control.

California is the only state to hold a credit rating of A- from S&P, which is the worst rating among all 50 states. Illinois, President Obama’s home state has a budget shortfall of 40.2 percent. That means that the state must borrow forty cents out of every dollar they spend. Currently, out of every dollar the federal government spends, forty cents is borrowed. Ironically, Illinois will soon have to look to the federal government to bail them out of an unfunded pension liability they cannot meet. I am sure their hometown hero will oblige.

All of the top five who follow the red state model received perfect credit ratings from S&P, Moody’s, or both. Tax policy that makes for a friendly business environment is a hallmark of the Republican economic model. As the incessant class warfare rhetoric by the President demonstrates, the debate on taxes is at the heart of the fiscal cliff negotiations. Wyoming, with six percent unemployment, is ranked the most business friendly state according to the Tax Foundation. Not surprisingly, all of the top five states have tax structures favorable to job creators, which result in unemployment rates well below the national average.

Conversely, the bottom ranked blue states all exceed the national unemployment average. Tax policy favorable to business coupled with smart — not excessive — regulation spurs economic prosperity.

For years on the state level, Democrats have been selling the fantasy that big government in the name of fairness will expand the middle class. In states such as California and Illinois, they have succeeded. These policies benefit no one, in reality. Since applying the blue state model to the national government, we have seen our national condition deteriorate in the same fashion.

Under President Obama’s tenure, our credit rating has been downgraded by both the S&P and Egan Jones. The fiscal cliff threatens our standing with Moody’s. This was a predictable result of liberal policies.

Liberal class warfare policies will do nothing to reduce unemployment, the deficit, or achieve economic growth. Ask Governor Brown how his “punish the rich policies” are working out in the state of California. The state is bleeding productive citizens and companies every year to prosperous red states.

If Republicans cannot win this debate, then the federal government will look much the same as the “Golden State.” Soon, there will not be enough prosperous and productive red states to bail out the rest. Then what? That’s reality, and it’s frightening.

 

 

Comments

  1. Billy Ray Chitwood says:

    Where was Bill Whittle when his great speech needed to be heard all over the country?

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