Reuters Columnists Propose 4-State Bailout Plea

Capitol Region Voice posts a response to made-up letter

Letter: Bail Out the States? (New York Times)
Saturday, January 22, 2011
To the Editor: Pretending to be writing as four Democratic governors seeking federal bailouts of their states, Rob Cox and Richard Beales (“How 4 Governors May Ask for Help,” Reuters Breakingviews, Business Day, Jan. 10) cite Tax Foundation research showing that their states have paid more in federal taxes than they’ve received in federal spending. Mr. Cox and Mr. Beales say that entitles the four states to federal financial “help” flowing in the opposite direction. Not even close. The differences are overwhelmingly a result of the federal income tax, which extracts larger percentages of income from higher earners. So long as we have a heavily progressive income tax, states with more high earners (like the four in the article) will always end up sending more revenue to Washington than they receive in federal spending. Even a huge bailout to certain states wouldn’t change that dynamic much. Illinois, California et al. are in fiscal trouble not because they receive too little money from Washington, but because they haven’t aligned desired spending with available revenues. Governors should spend their time doing that rather than pushing for bailouts from other states’ taxpayers. Richard Morrison Manager of Media Relations Tax Foundation Washington, Jan. 18, 2011


http://illumen.orchidsuites.net/sites/capitalregionvoice.com/index.php?ht=display/ContentDetails/i/4074061

Reuters Breakingviews
A Democratic Plea Republicans May Listen ToBy ROB COX and RICHARD BEALES
Published: January 9, 2011

The newly installed governors of Illinois, California, New York and Connecticut face huge budget gaps that are worrying financial markets. In the extreme, federal government rescues might be called for. Breakingviews imagines how these Democratic governors from traditionally left-leaning states may justify a plea for help from Congress.

http://www.nytimes.com/2011/01/10/business/10views.html

The case for Washington bailing out some states
Jan 10, 2011 10:04 EST
By Rob Cox and Richard Beales
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

NEW YORK — The newly-installed governors of Illinois, California, New York and Connecticut face huge budget gaps that are worrying financial markets. In extremis, federal government rescues might be called for. Breakingviews imagines how these Democrat governors from traditionally left-leaning states might justify a plea for help from the U.S. Congress.

Dear Esteemed Members of the 112th Congress:

Like many of you, the four of us have been elected with strong mandates. The voters of Illinois, California, New York and Connecticut have asked us to rectify past mistakes and set sustainable paths for the future. While we are Democrats and most of you are Republicans, we share your wish to address our financial challenges.

http://blogs.reuters.com/columns/2011/01/10/the-case-for-washington-bailing-out-some-states/