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State Deficits - Wars
On NY's Spending
NY State’s new Governor Andy Cuomo came out with his 2011 budget. The
Gov. referred to it as an austerity budget. Amazing what austerity looks
like these days.
The total austerity spending in the plan comes to a tidy 133 billion. A
very big number these days. But really it is much worse for those long
suffering New Yorkers. They also have to pay city, town and county
taxes. The 2011 budgets for a few of the other big spenders:
NYC………..…$65b
Nassau county….$2.8
Westchester……..$1.8
Buffalo,
Syracuse,
Yonkers.
Rochester……….$2.0b
On top of this you have hundreds of other smaller cities, towns,
villages that also are collecting taxes and spending money. The numbers
I’ve provided for 2011 equal more than $205b. The total is at least
$225b.
The census put NYS GDP at 1.09 trillion in 2009. It will be higher than
that in 11’. Call it 1.2T (generous). The conclusion is that NY State’s aggregate public sector spending to GDP is 19%. But, of course, it's worse than that.
NY’s citizens also pay federal taxes and share in the federal budget.
What is NY’s share of that? Total federal spending will come in at
around 3.3 Trillion and GDP around 15T. Federal spending is 22% of total
GDP. Does this mean that the combined (state/federal) spending to GDP
is ~40%? No, there are some double counts as some federal money actually
goes back to NYS. But the number is certainly not less than 30%. It is
at least one-third of state GDP.
Unsustainable is the word that comes to mind. And this is an austerity plan.
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State Wars
The BLUE/RED state politics are interesting to watch. The Reds killed
the Blues over BABS. The impact on the Muni market has already been
felt. The Blues are at it again. The issue this time? Deductibility of
state income and local property taxes (“SALT”) for IRS calculations.
This is a big deal. It will hit those Blue states very hard. Total SALT
taxes were $700b in the last fiscal year. Using a federal rate of 25%
you get total deductions of federal taxes of $175B. Which state’s
residents will be whacked on the head with this plan? Blue states, of course.
State sales taxes can also offset IRS liabilities. They have fallen into
the category of “other taxes paid”. Therefore it would be “logical” to
eliminate the deductibility of sales taxes as well. It would be a huge
“stealth” tax increase. But we might not get a logical outcome. Once
again, the Reds are trying to screw the Blues. Congressman Kevin Brady
(R., the very Red State of Tx.) has proposed that the deduction for
state sales tax be made permanent.
Something along these lines is in the works. There will be limitations
on the deductibility of SALT. Sales taxes will be fully deductible. For
Texans who pay large sales taxes but pay no income taxes it results in a
big win over the poor slobs in NY, CA, and IL who will have to foot the
bill. In 2007 the 19 big blue states levied property taxes of $241b. This came to 65% of the US total. In 2011 both the raw numbers and the percentages are higher. Meaning a loss of property tax deductions hits the blue states disproportionately large.
So the Reds will “win” again. This is about politics, not sound tax policy. This is about the next election.
There is going to be a big conflict between Red and Blue states. There
already is the basis for a war. What the Reds keep forgetting is that a
substantial portion of federal revenue comes from the Blue states. So it
is really not clear who is holding the best cards. A possible outcome
could be that California, NY and Illinois band together and invade
Texas. Texas will prove to be the balance of power as the “beggar my neighbor’s state” policies unfold.
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Correct. Texas beats CA, IL and NY combined. THEY would have to invade, Texas would be waiting. Yankees would have to go through Oklahoma, Arkansas, New Mexico or Louisiana first, so would take some losses along the way.
Quickest war in US history.
Texas could also beat Mexico, so don't ask for their help Yankees!
You think your puny Lapua rounds can hit a stealth bomber?
How will Texas fare when the Vinson, Reagan, and Nimitz are parked off Corpus Christi?
Yeah, the only advantage CA, NY, and IL will have is body count. Not sure the Wall Street types here would dirty their shoes fighting a war. After all, isn't that what they pay others a whopping $25,000 per year to do on their behalf? After all, somebody has to create derivatives and push up commodity prices right?
We've got some used F-117s that say otherwise...and carriers in SD. Brizzing it.
Body count matters - just look at the last civil war we had.
I think bruce yodels and wears liederhosen, Pton. I don't think he is interested in war. Smoking pot, maybe,skiing in the alps maybe. Bruce will sell the munitions to both sides and fuck all the women whose men are off to war. That's my plan too
in your dreams, you live out your fantasies here? I know you think you are much more enlightened than your enemy, but don't let unwarranted hubris get the best of you.
Agreed, talks cheap.
Wow Top, that's a little harsh.
come on everybody, lets give Bruce a group hug....
Not me.. I always have been a little suspicious of men in liederhosen.
I don't wear liederhosen. I do throw the unspunnen stone. Watch out!
lederhosen= leather shorts
liederhosen= approximately "singing opera shorts"
I know, I know...irrelevant, maybe, but I can't help myself.
Duly noted....and yes, I would not have been able to resist either
I do not think so.
The Blue states are bankrupt and will be asking the poor Red states to bail them out.
Yes, there could be war.
I have yet to meet a liberal that could take a strong punch of reality.
A lot of unfocused anger is emerging. When they shut down the internet the Egyptians really turned out. None of that could happen here. The stores still accept food stamp debit cards. Just wait until Uncle Sam cannot print up any more food.
CA sold $36B worth of food in 2008...I think we'll be okay. Our bondholders? Not so much.
Here's one 'tard. Guess which states subsidize the traitor states... Yeah, that's us.
Bruce I laugh when you cry about your health insurance costs, people like you are the reason for the tyrants.
But you finance everything! hey, why worry about health insurance since you're killing it? I'm not at all worried about cotton being at a record high, why should you since you are such a rich nyc thief?
Hey this is not fair. You are out trolling me. I am the legally designated troll around here. Registered and certified. You go troll elsewhere.
Off-topic but 30 year hit at least 4.64 today.
Yes bruce we are absolutely screwed. It's suprising how optimistic you can be sometimes.
We speak of employment gains, but where? Gov jobs which are unproductive and add to the debt. We will add over 2t to the debt this year.