Let’s return to one of the hottest topics we have been covering over the past few years, coverage that has intensified recently: which major city or state government will get to bankruptcy court first? Our primary cities it he race to bankruptcy include New York City, Chicago, Los Angeles, San Francisco, and newcomer, Seattle. The state governments that we think are soon heading into bankruptcy include New York, New Jersey, Illinois, and California with Washington state a newcomer to the race.
Before reviewing the latest news and seeing which state or city is making the best progress towards government bankruptcy, let’s review how these cities and states got themselves into this financial death spiral position to begin with:
A government entity keeps expanding its budget, eventually putting pressure on the tax revenue stream it receives.
At some point, rather than cut government spending or make its programs more efficient financially, the politicians in charge raise taxes to meet the ever growing government expenditures.
The raising of taxes causes some residents and businesses to leave the city or state for less tax burdensome areas, reducing the tax base and reducing the revenue stream.
Rather than cut expenses and become more efficient to match the reduced tax revenue stream, politicians in the above cities or states raise the tax burden even more.
This causes more residents and businesses to flee the city or state, further reducing the tax base and tax revenue stream.
At some point politicians panic and raise taxes more and start cutting vital government services (e.g. police, fire, education) in order to try and balance government spending against the shrinking tax base and revenue stream.
The reduction in quality of government services in particular and quality of life in general drives more residents and businesses out of the area.
Eventually, the expenses, costs and financial liabilities outstrip the reduced tax stream and bankruptcy occurs.
Okay that’s the process, now lets check the progress some of the above listed government entities are making to achieve this bankruptcy goal against this process:
1)Political philosopher, Hannah Arendt, described political ideologues as follows: “[they] function in a world of no sense.” In other words, they have these philosophical ideas that work in a college classroom but make no sense in the real world of budgets, common sense, and other ideas. As a result, when that insanity leaves the classroom for the real world, things fall apart in so many different ways.
And that falling apart process is happening right now in the cities and states listed above that are heading for bankruptcy court. And one of the reasons they are going bankrupt is because the ideas their political leaders are proposing and implementing are just plain stupid and non-workable. This results in inefficient and ineffective government programs that waste taxpayer money and frustrate the taxpayers.
But nowhere is Ms. Arednt’s keen observations more front and center than in New York City:
You know that a liberal/democratic politician is screwing up when even the biased New York Times agrees with reality that the current socialist mayor, Zohran Mamdani, is screwing up royally.
According to the Times: "As New York’s first modern mayor to wholly embrace democratic socialism, Mr. Mandani has little actual power to impose that ideology on city government."
For example, he promised free daycare for kids and parents living in the city but one hundred days into his term he is nowhere close to fulfilling that promise.
If he is lucky, he may get one free daycare opened by later this year, a single daycare center in a city with millions of kids.
And that is only possible because the state government and governor gave him a one time gift of a whopping $1 billion to get the single day care effort off of the ground.
It is going to get very expensive to give out free daycare to every city kid if it takes a billion dollars to open a single location.
He promised free bus rides for everyone but that promise probably has an even slimmer chase of ever happening.
The MTA, the city agency that operates the city bus system, is already hurting for ridership and revenue so to remove the revenue from bus fares would make a bad situation worse.
The reality is that free bus rides would cost an additional $700 million a year on top of the current revenue crisis.
He also promised to freeze rent costs in all rental properties in the city which was a stupid idea to begin with.
But apparently he cannot dictate that plan since the city agency tasked with rent programs, the NYC Rent Guidelines Board, has to legally "balance the interests of landlords and renters taking into account expert testimony about the city’s housing market."
Mamdani does not care about landlords but he is legally constrained to stick financial hardship onto them.
He also wants to raise the tax burden on the wealthiest city residents to fill in his current budget hole of $5.4 billion, but the city council will also have a strong say to determine if that happens.
The reason for going through Mamdani’s promises and failures to deliver is that he is focused on philosophies and ideas that cannot stand up against reality. Rather than focus on real life problems and make city government more efficient and smaller in order to live within the current revenue stream, he promises grandiose “free” programs that rational taxpayers and residents realize are not in alignment with their needs and worries.
And eventually those residents will realize that their tax dollars are being wasted for ideas that are stupid and ineffective and they will take their hard earned income and wealth somewhere else where their concerns will be realistically addressed.
2)And those residents are already leaving the city and leave Mamdani’s unrealistic and nonessential programs behind:
According to an analysis by the Citizens Budget Commission, and an article by Snejana Farberov on the Realtor.com website, it is not only the wealthy residents that are leaving NewYork City.
The loss in the city’s population in 2025 was driven by the out immigration of taxpayers across all income brackets, not just the wealthiest.
And while the city’s population grew in 2023 and 2024 before declining in 2025, the population gains in 2023 and 2024 were driven by illegal immigrants, most of whom were not paying city taxes.
Thus, a lot of the new city residents were actually a drag on city tax revenue since the city was giving them free shelter, free food, free medical care, and other freebies without collecting much tax from most of them.
In total, the city lost 114,000 more residents to other U.S. locations than it gained.
Specifically: "More New York City residents of all incomes, races, ethnicities, and ages have moved to other parts of the U.S. than moved in. Such broad-based domestic outmigration demonstrates that many differently-situated New Yorkers no longer find New York City’s value proposition compelling."
The study authors suggest that high taxes, the high cost of living, high housing costs, and the less than stellar quality of city services is driving the out migration: "It is a barometer of the challenges of raising a family in New York City.”
And while many ex-city residents are staying relatively close to New York City, settling in New Jersey, Connecticut, and Pennsylvania, not surprisingly, many are headed to low tax burden areas like Florida, Texas, North Carolina and Georgia.
According to the analysis and report: "People leaving the city may be choosing a place offering them a higher value proposition through a better mix of quality of life and cost of living. Notably, Florida and Texas have lower taxes. New Jersey and the rest of New York State apparently offer amenities making the choice to leave worthwhile for some, despite relatively high taxes.”
The bottom line is that New York is losing residents and it is not just the wealthy who are leaving and taking their taxable income and economic power with them. And Mamdani does not get it, offering mythical free day care, free busing, and other pipe dreams that will never be successful but will waste big time tax dollars in the process.
All of which accelerates the city’s rush to the bankruptcy court.
3) Mamdani’s female equivalent out in Seattle is also doing a good job of generating stupid ideas that have no chance of being successful and will continue to drive people out of the city:
We have already discussed mayor Katie Wilson’s inane comment, when asked if she was worried if millionaire taxpayers in the city would be leaving because of high taxes.
She basically and falsely stated that she did not think they were leaving but then condescendingly added, “Bye,” showing no awareness of who was paying a hefty portion of the city’s taxes.
Before we discuss her latest out of touch comment, consider the reality that the business office vacancy rate in the city is currently 26.6%, i.e. there are a lot of empty business spaces throughout the city as businesses have either fled to better businesses s or new businesses are not even considering moving to Seattle to set up their office and business.
This is the second highest vacancy rate in the country, surpassed only by one of our prime candidates to go bankrupt, San Francisco.
In certain sections of Wilson’s city the business office vacancy rate approaches 50%.
Rather than work on the root causes of why businesses leave the city or do not start their business in Seattle, i.e. high taxes, high crime rate, persistent homeless problem, to encourage businesses to come to the city, she has come up with quite possibly the most ridiculous economic idea EVER.
Her idea: tax business office space owners for any vacancies they may have in their buildings, i.e. the more empty space you have in your office buildings the higher tax rate would be for those vacancies.
TV host, John Curley of KIRO in Seattle, certainly does a great job describing why this idea is so stupid: “That’s their plan: If you can’t rent it, you better drop the price. If you don’t drop the price and get somebody in there, we’re going to fine you or tax you. So here’s the guy that’s got the commercial building, billions of dollars tied up in the loans and everything. Nobody wants to come in, nobody wants to rent it. It’s just sitting there. It’s empty. So what does the city decide to do? Oh, I know how to solve that. Let’s increase the price of the guy who has to pay the bills every single month for the loan for the commercial building. I know how we can incentivize him. Don’t give him a tax break on it. Don’t give him some sort of incentive to get the thing rented. Fine them for every single month that the thing remains unoccupied. Bizarre.”
What color is the sky in Wilson’s world? Because she is certainly not operating in this world, not when she is so out of touch with reality with her vacancy tax idea. If her idea ever occurs, no commercial business developer would ever build and expand in the city, not when there was a looming vacancy tax over their head. They would take their construction dollars elsewhere and take potential city businesses and taxpayers with them.
It continues to amaze that people like Wilson and Mamdani have gotten into such important positions with their views being so ridiculously out of touch with the real world. Free everything in New York City, tax empty business office space owners for there not being enough businesses around. Insanity.
Rather than fix what really is important in their respective cities, these two clowns fixate on matters that have nothing to do with the real problems in people's lives and as a result, their cities continue to compete in the race to bankruptcy court.
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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:
https://www.change.org/p/deseat-congress-reset-freedom
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