Blue States Faring Much Worse In Economic Downturn

You don’t say.

The red-blue contrast is often overdrawn. But it’s a sensible way to understand Obama’s summer struggles. On health care, energy, taxes and spending, he’s pushing a blue-state agenda during a recession that’s exposed some of the blue-state model’s weaknesses, and some of the red-state model’s strengths.

Consider Texas and California. In the Bush years, liberal polemicists turned the president’s home state — pious, lightly regulated, stingy with public services and mad for sprawl — into a symbol of everything that was barbaric about Republican America. Meanwhile, California, always liberalism’s favorite laboratory, was passing global-warming legislation, pouring billions into stem-cell research, and seemed to be negotiating its way toward universal health care.

But flash forward to the current recession, and suddenly Texas looks like a model citizen. The Lone Star kept growing well after the country had dipped into recession. Its unemployment rate and foreclosure rate are both well below the national average. It’s one of only six states that didn’t run budget deficits in 2009.

Meanwhile, California, long a paradise for regulators and public-sector unions, has become a fiscal disaster area. And it isn’t the only dark blue basket case. Eight states had unemployment over 11 percent in June; seven went for Barack Obama last November. Fourteen states are facing 2010 budget gaps that exceed 20 percent of their G.D.P.; only two went for John McCain. (Strikingly, they’re McCain’s own Arizona and Sarah Palin’s Alaska.) Of the nine states that have raised taxes this year, closing deficits at the expense of growth, almost all are liberal bastions.

The urban scholar Joel Kotkin has called this recession a blue-state “meltdown.” That overstates the case: The Deep South has been hit hard by unemployment, and some liberal regions are weathering the storm reasonably well. And clearly part of the blame for the current crisis rests with decisions made in George W. Bush’s Washington.l

But in state capital after state capital, the downturn has highlighted the weaknesses of liberal governance — the zeal for unsustainable social spending, the preference for regulation over job creation, the heavy reliance for tax revenue on the volatile incomes of the upper upper class.

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3 thoughts on “Blue States Faring Much Worse In Economic Downturn

  1. MORNING ALL!

    Fox just had a piece on California. Noted that there was a factory that made engines or parts or something. Neighbors complained about the smell. The state came in and told them they would need modifications that would cost $5 million. Place closed down, 300 jobs lost. Solar panel factory moved to Oregon because of lower taxes, less bureauocracy.

    Stuff like that.

  2. And things will get worse. Just wait.

    Karl Denninger believes that the FDIC is tapped out and reluctant to shut down a multitude of insolvent banks because that would exhaust their reserves and possibly precipitate a run on all of the banks.

    http://market-ticker.denninger.net/

    Thunderdome here we come.

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