NYTimes’ Bob Herbert on Economic Catastrophe for Individual US States

Along with Frank Rich and Paul Krugman – who, despite our occasional disagreements, we still think is the best economics columnist in the mainstream US media, bar none –

Along with Frank Rich and Paul Krugman – who, despite our occasional disagreements, we still think is the best economics columnist in the mainstream US media, bar none –

Along with Frank Rich and Paul Krugman – who, despite our occasional disagreements, we still think is the best economics columnist in the mainstream US media, bar none –

Bob Herbert is one of the most under-appreciated assets in the star-studded constellation that IS the New York Times 😉.

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In this superb piece, he makes clear how Obama policies that have favored the Too-Big-To-Fail banks — pretty much at the expense of everyone else in the entire US economy — are inflicting disastrous damage on the invidividual American STATES,

which, UN-like the Federal government, which can run consistent budget deficits, albeit within limits, CANNOT by law run deficits.

Consequently, when faced with the on-going economic collapse of the American economy, it is at the level of the individual STATES —

which USED TO receive significant from the Federal government that no longer has any money to give them, having used it all to prop up the “zombie banks” that are the precursor to come of the US version of Japan’s “Lost Decades” —

that you can visibly see and feel the effects of what is going on in America today …

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A story that is not getting nearly enough attention is the ruinous fiscal meltdown occurring in state after state, all across the country.

Taxes are being raised. Draconian cuts in services are being made. Public employees are being fired. The tissue-thin national economic recovery is being undermined.

And in many cases, the most vulnerable populations — the sick, the elderly, the young and the poor — are getting badly hurt.

Arizona, struggling with a projected $2.6 billion budget shortfall, took the drastic step of scrapping its Children’s Health Insurance Program.

That left nearly 47,000 low-income children with no coverage at all.

Gov. Jan Brewer is also calling for an increase in the sales tax. She said, “Arizona is navigating its way through the largest state budget deficit in its long history.”

In New Jersey, the newly elected governor, Chris Christie, has proposed a series of budget cuts that, among other things, would result in public schools receiving $820 million less in state aid than they had received in the prior school year.

Some well-off districts would have their direct school aid cut off altogether. Poorer districts that rely almost entirely on state aid would absorb the biggest losses in terms of dollars. They’re bracing for a terrible hit.

For all the happy talk about “no child left behind,” the truth is that in Arizona and New Jersey and dozens of other states trying to cope with the fiscal disaster brought on by the Great Recession, millions of children are being left far behind, and many millions of adults as well.

“We’ve talked in the past about revenue declines in a recession,” said Jon Shure of the Center on Budget and Policy Priorities, “but I think you have to call this one a revenue collapse.

In proportional terms, there has never been a drop in state revenues like we’re seeing now since people started to keep track of state revenues. We’re in unchartered territory when it comes to the magnitude of the impact.”

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