Eric wrote:Some good ideas on how to solve this crisis: The US states’ budget crisis: Where should the money come from?The two-year projected deficit of the state of Wisconsin is $3.6 billion, little more than a rounding error when considering the vast wealth of the American financial aristocracy. The Koch brothers, the ultra-right patrons of Governor Walker, could write a check to cover that deficit and still remain billionaires.
Let us consider, starting with the low-hanging fruit, where the money could be found to wipe out the deficits of all 50 states combined, which this year come to a projected $130 billion.
* The extension of the Bush tax cuts for the wealthy, enacted by a Democratic-controlled Congress in December with the approval of the Obama administration, pumps $700 billion over the next ten years into the pockets of the rich. Reclaiming two years of that tax windfall would eliminate all the state budget deficits combined.
* Total compensation at Wall Street banks and securities firms last year hit a record $135 billion, according to an analysis by the Wall Street Journal, on all-time-high revenue of $417 billion. The recipients of the Wall Street bailout could bail out the states out of their own pockets.
* The 400 richest individuals in the United States dispose of a staggering $1.37 trillion in assets, an average of nearly $3.5 billion apiece. A levy of 10 percent on the resources of these billionaires would also erase the deficits of all 50 states.
* Combined profits for all American corporations rocketed upwards in 2010, hitting an annual rate of $1.66 trillion in the third quarter. A tax of eight percent on those profits—the same percentage as the cut Walker seeks to impose on schoolteachers and park rangers—would eliminate all state deficits.
* US corporations are currently sitting on $2 trillion in cash, refusing to hire workers despite collecting tax cuts that are supposed to be incentives to do so. A levy of 10 percent on that idle cash would provide enough money to eliminate not only the deficits of the states, but the deficits of all cities and local governments too, as well as preserving the jobs of hundreds of thousands of public employees.
* Hedge funds assets rose to $1.92 trillion in 2010, the highest ever, up from $1.18 trillion at the beginning of the year. Given a standard earnings formula of 2 percent of total assets plus 20 percent of the increase, hedge fund bosses stood to collect roughly $186 billion in personal income. An 80 percent tax on that income—less than the percentage rate on multimillionaires levied under the Eisenhower administration—would produce more than enough revenue to put all 50 states in the black. (It should be pointed out that the top hedge fund manager, John Paulson, had a personal net profit of more than $5 billion in 2010, while more than a dozen hedge fund bosses had personal incomes above $2 billion and many more took in over $1 billion).
This is, as a cursory analysis makes clear, not in any sense a possible practical solution to the budget crisis among the American states, but a bloody red bone thrown to the passions and animosities of class envy, which is, to the point, among the core traditional reasons for the budgetary problems of both the states and the federal government. The idea Eric supports here, that of stealing the money of "the rich" that they have legally and honorably earned through productive economic activity, whether investing in the productive activities of others or founding there own, as a solution to the irrational, reckless, and irresponsible spending of the political class, is not a solution at all but merely an emotional vent for those imbued with ressentiment.
The fundamental problem here is that government, at both the federal and state level, is out of control as to its size, scope, and responsibilities. The answer to its financial problems (and many of ours) is that government spending must be cut, and cut severely, so that the private sector, where real jobs and real net wealth creation exist, can be relieved of the stiff competition for scarce capital resources with the state as well as the economy crippling taxes necessary to maintain the bloated, program and patronage laying egg sack of government.
It has been the traditional misuse of taxpayer funds by the political class that has brought us to the present situation, and there is no reason to believe that confiscating yet more funds from a tiny subgroup of wealthy Americans who form the core of the job creating classes of society, will be used in any wiser or more intelligent a manner than in the recent past.
Furthermore, and perhaps even more to the fundamental point, U.S. corporations, Wall Street banks, and hedge fund managers are not the cause of the state's present woes. The politicians, bureaucrats, and rapacious unionized public sector employees of those states are the clear and present cause, and it is therefore they who should shoulder the lion's share of the burden of making their states whole.
The entities I've mentioned above do not create any wealth. They consume the wealth generated by others, and then shrilly demand ever more from their fellow citizens and their own Rome's burn, one by one.