Who Will Bail Out New York?

Like most blue states New York is going broke. It probably is broke already, but don’t tell anyone. As Francis Menton explains in an excellent post on his Manhattan Contrarian blog, the truth is, New York needs a federal bailout.

All the negotiations about coronavirus relief will eventually boil down to the Democrats desire to bail out blue states. If you want to know why it is so vitally important that Joe Biden assume the presidency come this January, the reason is: blue states are about to fall into an abyss. Only the federal government can save them. That means: the citizens of fiscally responsible states.

Menton’s analysis is worth your attention:

The blue state progressive political model consists of an endless list of government spending and redistribution programs, expected shortly to deliver perfect fairness and justice among all people, all financed by an assumed ever-increasing gusher of tax revenues. Then along comes the coronavirus: the productive economy gets intentionally suppressed, tax revenues plummet, and then what? Are we now expected to cut back on the government programs so recently touted as the sine qua non of human moral advancement? Worse, are public servants — those selfless individuals giving their lives to the righteous cause of human advancement through government spending — now to be laid off? Or have their pay or benefits reduced?

All of the blue states are currently facing this circumstance to greater or lesser degree, but none more so than my home state of New York. A June Report from researchers at Arizona State and Old Dominion Universities, cited at Bloomberg here, projected an annualized average decline in tax revenues among the states of 20%, but with New York leading all states with a projected 40% decline in tax revenues. Even if the decline turns out to be well less than the 40%, we’re still talking about a large part of the support for most-expensive-in-the-nation spending programs in areas like Medicaid, housing, and K-12 education. What’s the plan, Governor Cuomo?

The virus has been a catastrophe for these states, especially New York. And that’s not even considering the numbers of people that Gov. Cuomo consigned to an early death by sending coronavirus patients to nursing homes.

Menton concludes:

Good New Yorker that he is, Cuomo’s brain is just incapable of contemplating substantial cuts to state spending or the state workforce, even in areas like Medicaid and K-12 education where our state spends double or more per capita the average of the other states. Nor are meaningful tax increases really an option — we’ve basically already maxed out on the potential for squeezing big money out of a handful of the richest citizens. So there’s really only one option: the federal government just has to step up and pay our bills.