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Is your State Insolvent?

By Ron Brown NMLS #270845

Industry Observer with NMLS ID: 40831

January 21, 2010 12:47 PM

I ran across a rather disturbing report today. The CBO released "Policies for Increasing Economic Growth and Employment in 2010 and 2011."

According to one of the charts, we are looking at many more States than just California with severe budget shortfalls. When you take these kind of numbers together with declining tax revenues resulting from decreasing consumption and increasing unemployment it is hard to see just how we will pull off any kind of real recovery.

Chart of the day

For the last 40 years, our government has been borrowing money to "invest in our economy," but we have had to borrow more than $1 for every $1 of growth in our GDP. This kind of economic behavior is unsustainable, and we cannot tax, or grow our way out of this under the current debt load. Simply slashing the budget would probably result in an economic depression that would be magnitudes greater than the "Great Depression" of the 1930's.

Unfortunately, most of the policy options from the report have a marginal effect at best. So, do you think this will be enough for our "Representatives" to take the issues seriously, and come up with a more comprehensive plan that does not involve going ever deeper into debt?

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Cheri Smith

Prudential Gary Greene, Cypress TX - Cypress, TX

Realtor Prudential Gary Greene

All I can say is that if I did my budget like these "people" do budgets I'd be living in a tent. I think it's time to realize that as a nation our biggest failure (besides moral decline) is not teaching budgeting in the school systems.

Jan 21, 2010 10:48 PM

and I just have to say....I loved Washington when I lived there....all except the rain. Point Defiance Park was one of my favorites.

Jan 21, 2010 10:49 PM

Kevin Robinson

Twin Falls, ID

Fractional Developer

Here in ID, we are right in the middle group. Our gov just made some huge cuts so we will see how things go for 2010.

Jan 21, 2010 11:29 PM

Featured in Tea Party!

Jan 21, 2010 11:43 PM

Dale Terry

Yadkinville, NC

I agree that we are in for a world of hurt, but disagree on the possible outcome of slashing budgets. We all must live on a budget unless you have great wealth and most of us have trimmed the sails pretty far. What I see is that the same attempt by government at all levels is to spend more than is coming in, just to increase it's size. We need to cut back the size of government because most of government doesn't help or work for the taxpayer. In many cases the size of the dept. is as great or greater than the citizens it helps. And of course, there are depts, agencies and others that work only for non citizens, be it social, diplomatic or military.

I think we would take the hit and be better for it. Just do it.

Jan 22, 2010 12:38 AM

Ron Brown NMLS #270845

NMLS ID: 40831 - Federal Way, WA

Cheri - Absolutely correct. Families start with their income, and decide what they can afford. Government starts with what they want, and then levies taxes to create the funding. Don't you wish we could do it that way?

Kevin & Dale - Budget cuts are definitely an important part of the solution, but cannot do it all alone. We need a comprehensive plan that decreases government spending while attracting new business growth. The problem is the only business growth of late does nothing to actually produce wealth for society because of our switch to a services, and consumption base.

Jan 22, 2010 02:16 AM

Delaware Junk Removal Residential And Commercial Hauling Clean Outs

Delaware Junk Removal 302-530-9186 - Wilmington, DE

Whole House Clean Outs, Basements, Garages, Attics

Light blue but it seems like there are state workers everywhere I look, little wonder huh?

Jan 22, 2010 05:00 AM

Jay-Paul Lowry

Riverside, CA

YES!!!

Jan 22, 2010 05:37 AM

Gene Wunderlich

1st Action Real Estate - Murrieta, CA

Realtor & Legislative Liaison

In California we take great pride in being #1. Illinois may be close behind in percentage terms but our budget gap is bigger than their whole budget. We're #1. We're #1. That's a good thing, isn't it?

Jan 22, 2010 05:51 AM

Larry - Check out www.recovery.gov and you can find out how many got their job from the stimulus spending (if you care to believe the numbers).

Gene - It is good to be the best at something, right?

Jan 22, 2010 12:10 PM

Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

Our legislature in Florida made some pretty serious budget cuts the last 2 years, but then they raised fees on everything from license plates, to court filings, to recording fees, to traffic fines. Nickeling and diming people to death. The worst thing is that keep spending money on big infrastructure projects that will never even break even.

But at least they are getting "stimulus" money from Washington to fill the budget gaps. Oh wait ... Washington is broke too.

Jan 23, 2010 03:38 AM

Is your State Insolvent?

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