September, 2017, Part 3, Political Class Insanity: The Fiscal Insanity and Ignorance of Democrats

It is the beginning of another month which means it is again time to review the latest political class insanity from Washington and around the world. Political class insanity takes many forms including the wasting of taxpayer wealth, criminal fraud within government programs, inane and stupid political quotes and actions, the inability to create and implement effective and efficient government programs, stupid and ill performing economic policies and strategies, and other forms of insanity that continue to evolve and surprise and shock us.

1) I am not a fan of either political party, Republican or Democrat. Both parties have been responsible for running up a whopping national debt of almost $20 trillion without resolving a single issue facing Americans today. They are more concerned about their own greed and status than addressing any problem. Our schools still under educate, our infrastructure is still falling apart, we have been and are still embroiled in non-winnable foreign country conflicts, we have no overarching energy strategy or plan, the list of failures goes on and on.

But you have to hand it to the Democrats for being the much bigger screwups than the Republicans. Just look at their history of governing:

• Early in Obama’s Presidency, the Democrats controlled both houses of Congress and the White House but somehow managed to preside over the worst economic recovery in about 80 years, ran up the first annual Federal government trillion dollar deficit and then followed up that horrific performance with three more trillion dollar deficits, enacted Obama Care which is probably the worst piece of legislation ever passed by Washington, etc.
• At the state level traditionally Democratic states Illinois, California, and New Jersey are rapidly approaching fiscal insolvency and meltdown.
• At the local level, traditionally Democratic cities have either gone bankrupt (Detroit, Michigan, Stockton,California, and others), are heading for bankruptcy (Chicago), or are overcome with high levels of murders and violent crime (Chicago and Baltimore).

Quite the inane record of constant failure. But Kyle Becker, writing for the Independent Journal Review in early August, 2017, highlighted some election numbers that show how badly Democrats have performed recently and how Obama has probably contributed to more destruction of the Democratic party than anyone else ever despite having been elected President for two terms:

• If you look at the state governments where Democrats control both houses of the state legislature and the governor’s mansion (a political trifecta), than Democrats rule over only 7.2% of the country’s land mass.
• The Democrats now hold a record low number of trifectas (7) across all of the states.
• Republicans have 24 trifectas across the country, almost four times as many as the Democrats.
• Almost 50% of the country’s residents live in states whose government is completely under the control of Republicans.
• During the Obama Presidency, the Democrats at the state and national level lost over 1,000 governing positions in those levels of government.
• The Democrats now hold a record low number of governorships across the country.
• And things could get worse for the Democrats since in 2018 there are 10 Democratic Senators running for reelection in states that Trump carried in 2016 while the Republicans have only 2 Senators running for reelection that might be in trouble.

Again, I have no use for either party. But you have to be really inept as a political organization to have the results the Democrats have been running up over the past 8 years of the Obama administration. And ineptness is not something the country needs these days, given the many real issues facing Americans every day.

2) Let’s move onto another piece of political class insanity and I am afraid Democrats will do not do much better than what we just discussed. The Mercatus Center at George Mason University recently completed an extensive study along many dimensions (e.g. short term and long term debt, unfunded pension liabilities, etc.) to determine the fiscal condition of each state government. 

A state government in good condition has much more flexibility to serve its citizens since they have a good balance sheet and cash flow. States in bad fiscal shape either have to cut services and budgets or raise taxes which usually ends up in a death spiral of shrinking revenue and rising expenses.

According to their study and analysts Eileen Norcross and Olivia Gonzalez, the following five states are in the best fiscal condition:

1 - Florida

2 - North Dakota

3 - South Dakota

4 - Utah

5 - Wyoming

The following states are in the worst fiscal condition:

50 - New Jersey

49 - Illinois

48 - Massachusetts

47 - Kentucky

46 - Maryland

A few observations about these results:

• With the exception of Kentucky, the worst five states have been dominated by Democratic politicians for decades.
• These five states, according to Mercatus, have massive debt obligations and massive unfunded obligations: “Each state has massive debt obligations. Each of the bottom five states exhibits serious signs of fiscal distress. Their large liabilities and low cash on hand raise serious concerns about their ability to pay bills...Unfunded liabilities continue to be a problem. High deficits and debt obligations in the forms of unfunded pensions and healthcare benefits continue to drive each state into fiscal peril. Each holds tens, if not hundreds, of billions of dollars in unfunded.”
• Which is interesting since these states have some of the highest tax burdens in the whole country with New Jersey having the third highest tax burden on its citizens (according to a Forbes analysis) with 12.7% of citizens incomes being collected as state taxes, Illinois having the fifth highest tax burden (12.6%), Massachusetts having the eleventh highest tax burden (10.3%), and Maryland having the seventh highest tax burden (10.9%).
• In other words, despite taxing its citizens at much higher rates than other states, these fiscally under performing, Democratic controlled states have managed to squander away the high levels of taxes they have collected over the years and still have high levels of debt and liabilities.
• Conversely, the states in the best fiscal condition have low levels of debt, low levels of unfunded liabilities, good cash flows, growing economies, etc.
• And yet they collect far less in taxes then the five worst states with Florida having the 17th lowest tax burden on its citizens (8.9%), North Dakota having the 18th lowest tax burden (9.0%), South Dakota having the second lowest tax burden (7.1%), and Wyoming having the third lowest tax burden (7.1%).
• In fact, three of the top performing states, Florida, Wyoming, and South Dakota, do not even have a state income tax to collect and yet they still far outperform the bottom states which not only have state income taxes by usually high levels of state income taxes.
• Only Utah of the best states has a relatively high tax burden of 9.6% which places it at the 30th lowest tax burden in the country.

Thus, the correlation is pretty strong and yields the following pretty solid conclusions and summary: states dominated by Democrats in elected office tend to have the worst fiscal conditions and worst fiscal management histories even though they tax their citizens at much higher rates than states with Republican domination who have better fiscal management skills yet collect less in taxes on a percentage basis than the worst performing states. The numbers and realities do not lie.

And these conclusions do not end with the top five and bottom five. If you look at the top 18 states that are in the best fiscal health, you see that most are Republican dominated and many do not even collect a state income tax. If you look at the 18 states with a worse than average fiscal condition, you will see that most of them are Democratic dominated and most, if not all, collect a state income tax.

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Again, I have little respect and use for either party but if given a choice, it is pretty clear that Democrats will tax you more, screw up your state government fiscal conditions more, and in the process reduce your freedom by reducing the amount of wealth you get to retain and have to use as you please.

More insanity to follow this week.

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http://www.conventionofstates.com
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