Just as we were talking about having to cut spending and raise taxes, and possibly selling off public land, all in order to meet the budget deficits, here comes this great news. 46 of the US States are faced with Greek style deficits, and they must do something to close up the budget hole that they have created by over spending. And with everyone getting ready to pay higher taxes in order to pay for Obamacare, raising taxes will not bring much more in, for to close the gaps, some economists suggest tax rates of 80 to 90% on every American. In plain English, you make $100, and you bring home only $10 or $20 of it. With that, more and more people will be headed to the welfare line because they can not afford food, untilities, and other bills, so the government needs to raise even more money to pay for more people needing money back from the government. This is unsustainable. Scott
Californians don’t see much evidence that the worst economic contraction since the Great Depression is coming to an end.
Unemployment was 12.4 percent in May, 2.7 percentage points higher than the national rate. Lawmakers gridlocked over how to close a $19 billion budget gap are weighing the termination of the main welfare program for 1.3 million poor families or borrowing more than $9 billion in the bond market. California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.
Far from rebounding, the Golden State, with a $1.8 trillion economy that’s larger than Russia’s, is sinking deeper into its financial funk. And it’s not alone.
Even as the U.S. appears to be on the mend — gross domestic product has climbed three straight quarters — finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP.
“States are going to have to cut back spending and raise taxes the same way Greece and Spain are,” says Dean Baker, co- director of the Center for Economic and Policy Research in Washington. “That runs counter to stimulating the economy and will put a big damper on the recovery in the latter half of this year.”