Doyle's Departure: Too Late for Wisconsin's Survival?

There are a lot of good reasons that James Doyle is fleeing the office of Governor of Wisconsin. He's bled the State's coffers dry, denuded 'trust' funds for doctors and highways, lied repeatedly about tax increases, failed to implement reductions in the Thompson-bloated State workforce, blatantly prostituted his office's favors to his moneyed pals WEAC and the Tribes, used his power to implement social revolutions in "marriage" and related benefits-payments, and exited the country to watch business after business close its Wisconsin operations. His totally incompetent Administration has overseen the deaths of helpless children and the theft-by-fraud of tens of millions of dollars in "child care" payments.

There are probably another several dozen reasons that have not yet emerged--but Mitch Daniels outlined what may be coming.

State government finances are a wreck. The drop in tax receipts is the worst in a half century. Fewer than 10 states ended the last fiscal year with significant reserves, and three-fourths have deficits exceeding 10% of their budgets. Only an emergency infusion of printed federal funny money is keeping most state boats afloat right now.

...What we are being hit by isn't a tropical storm that will come and go, with sunshine soon to follow. It's much more likely that we're facing a near permanent reduction in state tax revenues that will require us to reduce the size and scope of our state governments. And the time to prepare for this new reality is already at hand.

How bad is it?

...unlike the aftermath of past recessions, odds are that revenues will take a long time to catch back up to their previous trend lines—if they ever do. Tax payments have fallen so far that it would require a rousing economic rally to restore them. This at a time when the Obama administration's policies on taxes, spending and more seem designed to produce the opposite result. From 1930 to 2008, our national average annual real GDP growth rate was 3.49%. After crunching the numbers, my team has estimated that it would take GDP growth of at least twice the historical average to return state tax revenues to their previous long-term trend line by 2012.

(Remember that Obama's budget is based on a FOUR percent GDP growth-rate beginning in 2011. Based on the above, that's not going to happen. Doyle's budget has already been 'busted', with LFB revenue projections already off --marginally, yes, but off.)

...One-third of state revenues (over half in seven states) come from sales taxes, but it's hard to imagine them snapping all the way back up to where they were just a few years ago. Americans are now saving much more then they used to relative to how much they are spending.

And the tobacco-runs out of Wisconsin to Illinois, Minnesota, and Michigan are just beginning.

...Both individuals and businesses are fleeing soak-the-rich states already. Those who remain in high-tax states will be making few if any capital gains tax payments in the years to come. Even if the stock market comes roaring back to life, the best it could do is speed the deduction of recent losses.

Daniels did things in Indiana that Doyle only lied about here:

...We've also reduced the number of state employees by some 5,000 from the 2004 level.
In contrast to the national pattern, our per capita state spending has cut, on average, 1.4% each of the past five years. Indiana is now the sixth thriftiest state by this measure.

Unlike the federal government, states cannot deny reality by borrowing without limit. The Obama administration's "stimulus" package in effect shared the use of Uncle Sam's printing press for two years. But after that money runs out, the states will be back where they were. Even if Congress goes for a second round of stimulus funding, driven by the political panic of bankrupt Democratic governors, it would only postpone the reckoning.

Yah. Thanks, Jimbo!

And may the door hit you so hard on your way out that you land someplace far, far away.