April 6, 2010

MEGAN MCARDLE: Saving States From Themselves. “If the feds bail out these states, they’re assuming an ongoing obligation–and encouraging other states to let their fiscal problems get as big as possible, so Uncle Sugar will have to pay off. Leaving aside any ideological questions about robbing Peter to pay Paul, and the proper size of government, the federal government simply cannot afford to take on all these new obligations–and if it did, its ability to borrow money would rapidly become unsustainable. Sure, there’s nothing wrong with giving states temporary assistance to keep the recession from hitting too hard–but we’re approaching the point where that’s not really what we’re talking about. We’re talking about letting states make big promises without bothering to find sustainable sources of revenue with which to pay for them. That’s not something the federal government can afford to encourage.”

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