Let’s take a brief break from our run of posts regarding the massive corruption and fraud in government programs along with our political class insanity thread and 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 in the 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.
The reason for returning to this topic in the midst of our corruption series is because there have been some significant developments in the race to bankruptcy court. However, 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)The cities and states that are likely to go bankrupt soon all share some common problems: high taxes, high crime rates, high gas and utility rates, lower and lower quality of life, major homelessness problems, etc. As a result, residents and businesses are not stupid, they will go to areas where these listed problems are lower, minimized or do not exist.
Those fleeing residents and businesses head for states like Florida, Texas, South Carolina, Tennessee and a few others to escape the oppression in the state and cities heading for bankruptcy. And the latest numbers starkly show what is happening, highlighting the difference from a state that is thriving (Florida) and a state that is self destructing (California):
California lost 229,000 residents in 2025 alone.
The city of Los Angeles, a prime city candidate to go bankrupt, lost a whopping 54,000 residents in 2025.
While this out migration has significantly reduced economic growth in California, the state economy of Florida just hit $1.8 TRILLION.
That is a whopping, unheard of 6.3% annual economic growth in one year.
This $1.8 TRILLION pushed the state economy past the size of the entire Australia economy and the entire Mexican economy, making it the 14th biggest economy in the world.
The current set of politicians running Florida have successfully cut taxes, paid down government debt, managed quality of life problems and as a result, the state has boomed with economic growth and population growth.
These state politicians delivered almost $10 billion in tax relief for Florida residents since 2019 and paid down 50% of the state government debt that had accumulated since statehood.
Thus, the outstanding government debt for Florida is less than $1,000 per resident while states like California and New York, prime bankruptcy candidates, have per capita debt in the thousands and thousands of dollars.
Florida has a $3.8 billion budget surplus heading into 2027.
The current governor, Ron DeSantis, has gotten a property tax initiative on the November ballot that if approved, could eliminate property taxes for millions of Florida homeowners (excluding school property taxes.)
Florida leads the nation in new business startups and manufacturing job growth.
But it is not just California that looks pathetic from a financial, debt and tax burden perspective relative to states like Florida:
New York state has lost 800,000 residents over the past four years.
Many, many of them high earning and high tax paying residents.
Illinois ranks 48th nationally in domestic out migration, ahead of only, who else, California and New York, relative to residents fleeing.
And while businesses large and small have been fleeing states like California, New York and Illinois, in 2025 alone, 698,000 businesses set up shop in the state of Florida.
New York state lost $111 billion in adjusted gross income, income loss that could no longer be taxed, from out-migration of residents and businesses between 2011 and 2021.
Illinois and Chicago have unfunded government pensions liabilities that credit rating agencies have ranked them the worst in the nation and as a result, city actuaries, smart people when it comes to numbers, predict that Chicago will go bankrupt in about 5-7 years.
We have been discussing the financial death spiral process for a long time, as outlined above. That death spiral theory and discussion is no longer just a theory: the states and cities that we initially predicted would enter into financial death spirals, given the incompetence of their city and state politicians, are now in full effect and likely unable to be stopped before bankruptcy.
2)Gavin Newsom has been the California governor for the past seven years. During that time, crime is up, homelessness is up, housing costs are up, utilities and gas prices are up, taxes are still sky high, and the state budget has exploded but resolved none of the major problems facing California residents.
As a result of how incompetent he is and the politicians around him are:
Only 11% of California families can afford a median priced home in Los Angeles.
Hundreds of thousands of residents are leaving the state every year to find more affordable housing and thus, a better quality of life.
Four of the country’s five most expensive housing markets are in California.
California is also home to about 25% of the country's homeless population while only having 11.5% of the nation’s citizens.
Pathetic governance from a pathetic and vain governor.
3)A little bit of history to show when the actual decline and out migration from California actually started …. and it was not the fault of Newsom:
Elon Musk is a very smart man.
The creator of Tesla and Space X, two major engineering and high tech businesses, has created new technologies, new profitable companies and wealth for himself and many, many others while creating desired products and services for the country.
At one point in time, his businesses were located in California.
In June, his Space X company went public, and the offer brought in a whopping $75 billion, the largest amount of money ever for an initial offering.
Not only did Musk get even richer, but employees of his Space X business who were allowed to share in the benefits of the IPO became millionaires overnight.
And these folks were not just high paid executives, they included many blue collar workers of his Sapce X endeavor.
Unfortunately, the state of California will never benefit from taxing these new millionaires and Musk's incremental wealth due to a single, three word tweet from six years ago.
Six years ago, Musk was not happy that California politicians had shut down the state in the face of Covid and idled his Tesla factories, leading him to threaten to pull his business, his employees, their economic impact, and tax dollars out of the state.
Apparently, rather than work with him or try to convince him the shutdown was right, a state politician, Lorenza Gonzalez Fletcher, issued the epic three word tweet, “F*ck Elon Musk.”
As a very smart man, Musk took the message and ran with it, moving company operations out of California and making sure his subsequent business dealings were not with the state of California.
With his exit from the state, tax revenue was lost from both his existing businesses and new businesses, economic activity from newly crowned millionaires from Space X happened outside the state of California, and the disdain that a state politician had for business and income generation probably had a chilling effect outside of Musk’s realm, affecting other businesses, further depressing state tax revenue.
And do not think that this ridiculous, inane tweet was not understood by Musk, given his simple response: “Message received.”
“This single tweet cost California hundreds of billions of dollars in taxes, revenue, and jobs,” investment banker and author John LeFevre wrote.
Mr. LeFevre estimates that this single idicotic tweet cost the state of California $100 billion in tax revenue over the past six years.
Still no cure for stupid. The market creates wealth and thus, taxes. Governments and politicians do not create wealth and taxes. Thus, to continually insult and over tax and over regulate the very entities that create the government's revenue stream is the height of stupidity. And as a result of Californians continually electing such incompetence, the state and a few of its cities are heading for bankruptcy, a direction helped along by a profane three word tweet.
4)We can talk about over taxation, over business regulation, high taxes and cost of living, high crime and homelessness rates, and other factors that coldly point to the reality that a major city or state will soon go bankrupt as residents and businesses along with their tax revenue and economic power flee. This reality will make for those left behind very sad, vulnerable, and poorer which is vry unfortunate.
But to take a brutal, reality look at what we have been talking about statistically, go to the following link and hit the video in the middle of the article: it kind of sums up the reality of what a declining state government and declining city government actually look like from a visual, non-statistical, satirical perspective:
https://redrightnewsfeed.com/new-viral-video-depicts-californias-state-of-decay
That will do it for today: Florida gets it, California does not get it, a California politician likely started the whole California state government death spiral situation, and satire and reality align with the listed video.
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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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