U.S. states face Greek-style budget crises

[marmar]

By Edward Robinson


June 25 (Bloomberg) -- Californians don’t see much evidence that the worst economic contraction since the Great Depression is coming to an end.

Unemployment was 12.4 percent in May, 2.7 percentage points higher than the national rate. Lawmakers gridlocked over how to close a $19 billion budget gap are weighing the termination of the main welfare program for 1.3 million poor families or borrowing more than $9 billion in the bond market. California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.

Far from rebounding, the Golden State, with a $1.8 trillion economy that’s larger than Russia’s, is sinking deeper into its financial funk. And it’s not alone.

Even as the U.S. appears to be on the mend -- gross domestic product has climbed three straight quarters -- finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP.

“States are going to have to cut back spending and raise taxes the same way Greece and Spain are,” says Dean Baker, co- director of the Center for Economic and Policy Research in Washington. “That runs counter to stimulating the economy and will put a big damper on the recovery in the latter half of this year.”

Stimulus Dries Up

State budget woes are a worsening drag on growth as the federal government tries to wean the economy from two years of extraordinary support. By Jan. 1, funds from the $787 billion federal stimulus bill will dry up. That money from Washington has helped cushion state budgets as tax revenue has plunged. .........(more)

The complete piece is at: http://noir.bloomberg.com/apps/news?pid=20601109&sid=atxrhPqbty_4&pos=10

[unhappycamper]

1. Well, we are spending a trillion dollars a year to keep the Empire going.

United States government to the small people: Suck it up.

[earthside]

3. Unemployment.

Indeed. Why doesn't the Obama administration utilize "pay-go" and call the Repuglicans' bluff on extending unemployment benefits ... by making an equal cut in the military/empire budget?

Or, dare it be asked, are not ALL of the powers that be in Washington boosters of empire?

[eilen]

4. Maybe because the wars

are our jobs program.

[Chisox08]

2. Trillions for war

Billions for tax cuts for the rich.
For the American people struggling to survive nothing but more cuts to the safety nets that are keeping them afloat.