“You cannot bring about prosperity by discouraging thrift. You cannot strengthen the weak by weakening the strong. You cannot help the wage earner by pulling down the wage payer. You cannot further the brotherhood of man by encouraging class hatred. You cannot help the poor by destroying the rich. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by taking away man’s initiative and independence. You cannot help men permanently by doing for them what they could and should do for themselves.” Abraham Lincoln
America’s left is suffering from Blue State Disease. In recent years, states like New York, California, Minnesota, Connecticut, Illinois, and Massachusetts have raised taxes on their citizens and businesses in an attempt to pay for all those promised government benefits, and unsustainable pension funds. At the same time, governors in conservative Republican states that include Arizona, Kansas, Indiana, Oklahoma, Tennessee, Utah and at one time Virginia, are cutting taxes.
Even Michigan, which now has a Republican governor and legislature, is turning to Reaganite ideas to transform its economy from the Rust Belt and bankruptcy image of its major city, Detroit. Thanks to tax cuts and its transition to a right-to-work state, the rest of the state, outside of Motown, is surfing a recent tide of prosperity as even manufacturing jobs are returning.
Blue State Illinois however, is another story. Despite raising income taxes by 60% in 2011 under Governor Pat Quinn, the state still can’t pay its bills. Their credit rating has been down-graded three times in the last year. John Tillman, president of the Illinois Policy Foundation says that “the unfunded pension liabilities are so gigantic in Springfield that few people want to move there and help assume that giant debt.” Former Indiana government Mitch Daniels wasn’t as polite. He said “being a neighboring state to Illinois is like living next door to the Simpsons.”
What those suffering from Blue State Disease can’t accept or refuse to see is that the biggest wealth transfer from one geographical area to another is taking place. Every day, about 20,000 people vote with their feet, most migrating out of blue liberals states to more conservative states. I And, what started as a trickle is turning into a stampede. According to the American Legislative Exchange Council, about $100 billion a year in purchasing power has migrated away from the Blue State Disease.
One way to measure a state’s economic vitality is to look at the number of people who choose to move there. Between April 2010 and July 2013, Texas gained 403,590 new residents as New York lost 328,538. Florida gained 308,152 as Illinois lost 224,704; North Carolina gained 107,282 as California lost 153,851.
Blue states are now in slow-motion decline, a decline that includes lost population, falling house values, a shrinking tax base, business out-migration, capital flight, high unemployment and less money for schools, roads and aging infrastructure. Over the last decade, 1.6 million residents fled New York, the largest population drain than in any other state.
There are movements afoot in states like Georgia, Kansas, Louisiana, and North Carolina to eliminate state income taxes, joining Florida, Tennessee and Texas. Just last year, Tennessee governor Bill Haslam signed legislation repealing the state gift tax and a phase-out of the state estate tax and there is even discussion of repealing the state’s tax on “unearned income” such as rent and investments.
Under Republican leadership, the pro-growth movement has spread north. During the last two years, Michigan and Indiana passed right-to-work laws and Indiana phased out its estate tax. Ohio governor John Kasich turned a $6 billion deficit into a budget surplus without a tax increase.
North Dakota, thanks to new oil and gas drilling technologies and a favorable regulatory climate, became America’s energy dynamos and last year had the biggest percentage population gain of any state. There are an estimated 10,000 unfilled jobs and even workers at McDonalds earn $15 an hour with signing bonuses of up to $500. North Dakota’s residents and political class saw an opportunity and embraced the drilling bonanza while most liberal states turned up their noses to energy production.
Many blue state liberals claim that their citizens prefer higher taxes to pay for better schools and public services, but a new study from Laffer and Associates shows that services aren’t any better in high tax blue states, they’re just more expensive, which helps to explain how Texas gained almost one million jobs since 2010 as California lost nearly that many. California spends 40 to 50 percent more than Texas on road-building, corrections, fire and police services and welfare yet the poverty rate in Texas in still around one third lower than California.
Business and workers are an asset, not ATM machines. And until the left figures that out, or until voters throw them out, Blue states will continue their decline. Low taxes, less regulation, the right-to-work and other free market policies are the life-blood of a strong economy.
Source: Stephen Moore, Chief Economist, Heritage Foundation, NewsMax Magazine
