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Saturday, April 21, 2012

Wisconsin vs Illinois...Which One Is In A Death Spiral ?

 There is and will continue to be a debate over the relative merits of Republican vs democrat policies on the economy. The perplexing thing is that we have a good many examples of what does and does not work all across the country but these examples are often ignored by those on the left but a very good example is shaping up in the Mid West yet again. If one looks to the states of Illinois and Wisconsin, one state believes that the road to prosperity is in higher taxation and more regulation and another state which believes just the opposite. One state run by democrats and unions and another state who just went Republican a little more than a year ago and that is trying to keep tax increases and union influence and demands on the pockets of the states taxpayers as light as possible. One state that is in an increasing trajectory to disaster and its neighbor to the north .

Illinois Shows What Not to Do

Wise Wisconsin isn’t imitating its spendthrift neighbor.

In January 2011, facing a forbidding budget deficit and a backlog of unpaid bills, Illinois officials decided that a massive tax increase would lay the groundwork for the state’s recovery. As Barbara Flynn Currie, the majority leader in the state house of representatives, said at the time, the nearly $7 billion in new revenues would allow Illinois to “pay our old bills and deal with the structural deficit.” The taxes passed with little controversy. Several weeks later, Wisconsin governor Scott Walker proposed fixing state and local fiscal problems by narrowing public-sector workers’ collective bargaining rights and requiring them to contribute more to their pension and health-care benefits. His reforms, which took months to become law, provoked an occupation of the capitol and set off a national debate.
Little more than a year has passed, and Illinois is right back where it started: the state’s unpaid bills now top $9 billion. Meantime, Wisconsin’s state and local governments have made substantial strides toward long-term budget stability. The different fiscal outlooks of the neighboring states illustrate a crucial fact in today’s budget wars: you can’t tax your way to a better future. That’s because the promises made by previous generations of politicians to public employees and special interests have become, as one northeastern mayor colorfully put it, the “Pac-Man” of budgets, gobbling up revenues faster than governments can raise them.

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