Last Thursday, David Wessel of The Wall Street Journal wrote about the differences between the United States and what they have and are trying to get to in Europe.* But the most interesting thing about the article was not Mr. Wessel’s comparison of the United States and the European Union. Rather, it was this chart, which accompanied it:
As you can see, the chart shows the current yield (i.e., the effective interest rate) on ten-year general obligation bonds of five different states. And the results are depressing.
Illinois’s effective borrowing rate is the highest in country. In fact, it is over ¾% higher than even California’s, and it is almost double Georgia’s.
In spite of a 67% increase in personal income taxes, the state budget is still a disaster. Our unfunded pension liabilities are the highest in the nation. Delays in paying the state’s bills have not been reduced to any appreciable degree. And rip-offs in the various state pension plans are becoming an almost daily feature in the Chicago Tribune. (When asked about these articles, some Democrats just say, “Oh, it’s the Tribune,” as if that means they don’t have look at the facts.)
I will admit that House Speaker Mike Madigan did, along with Republican Minority Leader Tom Cross, force the state Senate and Governor Quinn to limit spending in the 2011-12 state budget. But before giving too much credit to Mike Madigan, remember that he was speaker for all eight years of the Rod Blagojevich/Pat Quinn administrations, when spending went through the roof and the state budget went down the toilet. (Not easy to picture that, is it?)
Because of Speaker Madigan, Governors Blagojevich and Quinn, Senate Presidents Emil Jones and John Cullerton, and lots of other Democrats in the state legislature, Illinois promised and spent way more than it collected in taxes from 2003 through 2011. Now, in order to get its budget under control – and to get that interest rate down, Illinois is going to have to collect more in taxes than it spends. Other states have done it. The question is whether Illinois Democrats can do it – and given the way the Democrats have drawn (gerrymandered-?) the new state legislative districts, it’s Democrats who will be in control in Springfield for quite a while. Which seems only fair, since they are the ones who got us into this mess over the last eight years.**
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* David Wessel, “The Ties That Bond – and Don’t,” The Wall Street Journal, December 15, 2011.
** At least some Democrats will respond that it wasn’t their fault that the nation’s economy collapsed in 2008. That may be true, but Illinois’s overspending and bigger and bigger deficits started in 2003. By the time of the 2006 election, Illinois was already in bad shape (see here and here), and that was long before the economic crisis started.
Update (12/21/11 9:00 am): Fixed a typo in the second footnote.
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