Monday, December 15, 2008

State Governments Continue to Step on Business as They Beg for Bailouts

The United States economy has hit a road block in the last year. Day by day, we continue to watch industries step up to the coffer with their hands held out high. Today, we watch in horror as to whether President Bush will bypass Congress and hand out money to the auto industry. Standing in the shadows quietly waiting for their "we're too big to fail" loans are now the state governments.

The biggest state asking for help is California. Anyone who has ever lived, worked, or been in a human resource position responsible for California should not be surprised by their record economic troubles. California is not a business-friendly state. The Government of California has imposed more rules and regulations on it's business community than most other states in the union. It is for that reason that business is flooding quickly out of the state and the tax dollars they are draining have a huge impact on California's budget short falls.

While most of the focus on the economy is currently being paid to the Federal Government, state governments continue to shoot themselves in the foot with already struggling economies. For example, in October of this year, Pennsylvania's state government led by Governor Ed Rendell passed the Energy Conservation Bill. What's the big deal about this bill? It calls for energy companies to reduce consumption by 1% in 3 years, and up to 4.5 by 2013. I am not saying we should be against energy conservation, but for a state to tell an industry to cut it's business by law is more than ridiculous.

Today, news came out that New York Governor, David Paterson is looking to raise $404 million for the state by increasing taxes on such things as hospitals, insurance policies and yes a disturbing "obesity tax" on non-diet soda. It is interesting that in a deep economic hardship the first thing some of these state governments see as a solution is to raise taxes on citizens who are already struggling to make ends meet.

If we are now going to impose an obesity tax on soda, where does this craziness end? Will he be taxing chocolate makers or candy makers in general? How about New York pizza parlors? I'm sure with all of those slices New Yorkers eat each year are bound to put on some of their extra weight? Why not just increase taxes on food in general?

With all of the intelligent people we have running these states, do you really wonder why companies head over seas? I know the instinct right now is to watch all of the loan bailouts the Federal government is dishing out, but I'd be keeping a careful eye on your local and state governments. They will have a much quicker impact on your paycheck and your wallet.

9 comments:

Grace Explosion said...

My, my, my... the bankrupt State Governments want to be "bailed out" by the bankrupt Federal Government... because Government refuses to shrink in the face of economic ruin created by expanding Government.

How is this not going to create a tsunami of financial ruin in economic disaster that produces the dissolution of the USA just as the USSR was dissolved???

Yay!! It's going to!!!

And we'll have a new Christian nation of Christian bloc states that secede.

Call it prophecy. Call it political analysis.

I think it should be obvious irrespective of projections based on false expectations that things will continue according to yesterday in the USA.

It's a new day.

This is... incredible. I'm just shaking my head... as I read the very evident handwriting on the wall.

Grace.

An American Liberal said...

Anyone else read this latest comment and then head to the frig for a bite to eat? There needs to be a warning not to read these posts at lunch time. :-)

As for states having issues, that is to be expected. Please, I am not saying it is right and they shouldn't be more fiscally responsible, but rather I am not surprised.

Creative taxes versus substantive cuts and thought processes that are fiscally sound? While it would be irresponsible to assume that I understand their predicaments completely, I still think some of them are idiots.

Stacy,
Can I still like Arnold though? He really is working his butt off over in California, and I think he should be given a pass.
Feels odd asking that a Republican get a pass. Think the devil got a chill? :-)

Warmest Regards.
An American Liberal

PS Grace Explosion, what states do you believe make up this Christian Bloc? Please be assured this is genuine curiosity on my part. Oh and if you have a link, feel free to send me off on my own. Thanks a bunch!

nokomis said...

This is what ticks me off:

"During the past 12 months, overall total compensation of the highest-paid executive increased 20.5 percent while revenues increased 2.8 percent, the study found. As of February 2008, the average top executive received overall total compensation of $18,813,697, according to the study. In comparison, the median pay for workers rose only 3.5 percent to $36,140 in 2007, from $34,892 the previous year, according to the U.S. Bureau of Labor Statistics."

Some in business are doing quite well and could do more to help states through these tough times.

A CEO could forego a half day's pay and keep me employed teaching for another year or help a dozen kids keep their health insurance.

Do some people believe CEOs are deserving of this kind of $, 500 times more than ordinary workers?

The New Conservative said...

Your right the first thing they think to do is raise taxes. The fact that maybe they need to cut back themselves doesn't even cross their mind.

http://thenewconservatives.blogspot.com/

Stacy said...

I understand the frustration with CEO salaries. However, where do you stop? Do you dictate that sports figures can't make the money they do? How about actors? Should we limit their pay too? My point was not corporations not paying their share. The fact is corporations do not pay taxes. Whatever they do pay is passed on to their consumers.

My point is how far do we want government sticking their noses in private interprise?

Mel said...

I have to believe that the feds saw this coming, when almost the entire populace knew once they started bailouts that the line would grow ever longer.

An American Liberal said...

Nokomis,

I struggle with the greed of corporations as well. On the one hand if we regulate more we stifle businesses, but if we don't regulate, well we all know how that turns out.

However, neither of those issues should allow or encourage our government to spend beyond its means. I remember Ronald Reagan ran his campaign on the notion that as the Governor of California, he had actually balanced the budget there. Something we desperately need, but given the mess we are in, unlikely to see.

You know what would make a GREAT news story? A state who's fiscal prudence allows them to give the Federal Government back their pork.

"Yeah, our senator got us 10 billion, but bleh, you need it more than us."

I have a dream.....

An American Liberal

nokomis said...

The correct government response to outrageous income levels is tax the rich! Back during the campaign I got curious about what kind of annual income is required to maintain a McCain type lifestyle of a 10 or more each of homes and cars (approx.) plus a private jet. I can't really fathom it, but it seems to me a few million should cover it on a annual basis. Can a family think of ways to spend more $ than that.

So anyway the the way I see it incomes over a million should be taxed at least 50%. They could help make sure more kids are getting health care, enough to eat, and decent schools.

And how do we as taxpayers feel about helping to pay big bonuses for wall street execs out of the $700 billion bailout. Personally I'm mad as hell.

Anonymous said...

Why do we always say: "tax the rich and give to the poor who need healthcare, etc." If someone honestly earns the income, who are we to take away their incentive to make more? If they treat their employees with respect and monetary fairness, who are we to tax them to death and take away their ambitions which ultimately create more jobs.

Golden parachutes for idiots who bankrupt their companies is outrageous and unacceptable. Unfortuntely, those execs are on each others' board of directors and continuously vote each other increases - - - the same as our Congress does. They vote each others salary increases, perks, pork, and we even pay for their lawyers if they are caught doing something illegal.

We need to clean up our House (includes ALL public officials) before we can tackle our businesses. We need to quit blaming our rich for our woes; each of us has the same opportunity to become rich if we have the desire and willpower to stay the course.

There's a difference from the founder of Cosco who does right by his workers and Sam's Club who is run by greedy offspring. Maybe we should put a windfall tax on the greedy and the corrupt - - which should balance the budget nicely, and then some.

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