Friday, June 26, 2009

How not to govern a state

The WSJ looks at what California, New York, and New Jersey have in common besides having once been prosperous and now facing budget catastrophes.
President Obama has bet the economy on his program to grow the government and finance it with a more progressive tax system. It's hard to miss the irony that he's pitching this change in Washington even as the same governance model is imploding in three of the largest American states where it has been dominant for years -- California, New Jersey and New York.

A decade ago all three states were among America's most prosperous. California was the unrivaled technology center of the globe. New York was its financial capital. New Jersey is the third wealthiest state in the nation after Connecticut and Massachusetts. All three are now suffering from devastating budget deficits as the bills for years of tax-and-spend governance come due.

These states have been models of "progressive" policies that are supposed to create wealth: high tax rates on the rich, lots of government "investments," heavy unionization and a large government role in health care.
The tech and financial bubbles played a role, but bad policies have done more to drive these states to where they are today. Meanwhile, the Democrats seek to do for the country what they've done for these states.