“The threat posed by the state fiscal crisis in the U. S. is vastly underestimated and under-appreciated”,“Bond subsidies and transfers have allowed States to avoid making tough decisions. It won’t last”
Meredith Whitney, CEO of Meredith Whitney Advisory Group LLC.
And the Economist’s Manhattan Buttonwood Conference panel observed that state bailouts have already begun, “Over 20 percent of California’s debt issuance during 2009 and over 30 percent of its debt issuance in 2010 to date has been subsidized by the federal government in a program known as Build America Bonds. Under the program, the U.S. Treasury covers 35 percent of the interest paid by the bonds.” Further they pointed out that, “California is not alone: Over 30 percent of Illinois’s debt and over 40 percent of Nevada’s debt issued since 2009 has also been subsidized with these bonds.” [Here]
In addition to these Federal debt subsidies for the States, general federal government transfers to states are now at the highest levels on record. More than 28 percent of state funding now comes from federal government transfers. Only two States started 2010 without budget deficits. [Here] Blue, or Democrat-leaning states tend to run far higher per capita deficits [Here] Pete the Banker