Saturday, July 1, 2017

Maine, Connecticut, Illinois, New Jersey Run Out of Time and Money

Stocks managed to end the week, and the month, without a complete and total collapse, with the Dow actually posting a substantial gain.

However, a Friday turned to Saturday and June to July, at least four states have failed to pass budgets, facing enormous deficits, the worst of the bunch being Illinois, currently with $15 billion in overdue payments backlogged.

In New Jersey and Maine, state governments went into shutdown mode, while Connecticut governor Dannel Malloy took over control of the state's spending after the legislature failed to pass a budget on time.p

In New Jersey, state parks and other public areas were closed on Saturday, sending a painful message to citizens of government overreach on a four-day Independence Day weekend supposedly celebrating freedom.

Illinois was dealt another crushing blow when US District Court Judge Joan Lefkow ruled that the state must begin making larger payments to Medicare providers that are owed billions of dollars.

These developments have been years in the making, from bloated statehouses, county, and city offices which overpay employees, offer golden medical and pension packages that the citizenry pays for in the form of higher taxes, and promotes schools that provide delicious salaries benefits for teachers while providing substandard education to forced-enrolled students.

Cops and firefighters collecting $100,000+ pensions are not unusual in any of these states, and the pensions and medical benefits of government employees overall have caused fiscal crises that could have - and should have - been handled years ago. None of this comes as a surprise, but the outcomes will be different from state to state. Some may plead to the federal government for a bailout of sorts, with the implied proviso that they will give up some of their sovereignty in the process.

Others may choose to raise taxes, implement austerity measures, but eventually, all of them will have to default on over-generous pension promises made to prior government employees. Many will also have to cut pay to current employees, which will prompt reactions from the public service unions, which should be outlawed under federal law, and eventually, if there is any sanity remaining in government at all, will be.

Enjoy what there is of your Independence Day weekend, but bear in mind, the United States of America has reached a turning point, a breaking point. States are reeling from decades of uncontrolled spending and liberal policies and the taxpayers are fleeing or simply giving up.

The policies of overspending which began in Washington, DC, and has trickled down to the states have bled the nation dry and hard choices are already at hand. Whether or not the politicians can muster the courage to make the needed changes - a dubious prospect at best - the American people must respond with vigor.

At the Close, 6/30/17:
Dow: 21,349.63, +62.60 (0.29%)
NASDAQ: 6,140.42, -3.93 (-0.06%)
S&P 500: 2,423.41, +3.71 (0.15%)
NYSE Composite: 11,761.70, +21.72 (0.18%)

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