(Click here for larger map image)
A new report prepared by the Mercatus Center at George Mason University finds that Republican-governed states are the strongest according to five fiscal measures. Democrat-governed states lag far behind. (H/T William)
The report says:
The financial health of each state can be analyzed through the states’ own audited financial reports. By looking at states’ basic financial statistics on revenues, expenditures, cash, assets, liabilities, and debt, states may be ranked according to how easily they will be able to cover short-term and long-term bills, including pension obligations.
This ranking of the 50 states and Puerto Rico is based on their fiscal solvency in five separate categories:
- Cash solvency. Does a state have enough cash on hand to cover its short-term bills?
- Budget solvency. Can a state cover its fiscal year spending with current revenues, or does it have a budget shortfall?
- Long-run solvency. Can a state meet its long-term spending commitments? Will there be enough money to cushion it from economic shocks or other long-term fiscal risks?
- Service-level solvency. How much “fiscal slack” does a state have to increase spending if citizens demand more services?
- Trust fund solvency. How much debt does a state have? How large are its unfunded pen-sion and healthcare liabilities?
If you look at the map, you’ll notice that most the worst states are run by Democrats, while the best states are run by Republicans.
Investors Business Daily explains:
[W]hile Mercatus makes no mention of the states’ political leanings, every state in the top 10 except for Florida is solidly red, meaning those states voted for the Republican in each of the past four presidential elections (see table). And Florida has had a Republican governor since 1999, and the state House and Senate are both controlled by Republicans.
At the other end of the spectrum, except for Kentucky, the 10 worst states are all solidly blue. And all but two of the governors since 1947 have been Democrats.
Politicians, especially the “pragmatic” ones, are always talking about how they are just interested in what works. When it comes to keeping spending, debt and long-term liabilities under control, the place to look seems obvious.
The conservative approach of lower taxes and limited government is a winner, while big-spending liberalism invariably leads to financial ruin.
Kentucky, of course, is the home state of Mitch McConnell, and only just elected a Republican governor (Matt Bevin) who is a fiscal conservative. Every previous governor of Kentucky since 1971 was a Democrat, except for Ernie Fletcher.
The point here is that the real reason that some Democrat states look good is because they are borrowing money to stay afloat, an piling up debt. The same is true with our illustrious President Obama. He doubled the national debt from 10 to 20 trillion, and he has managed to deliver below average GDP growth and a 38-year-low labor force participation rate. He was the worst President in the history of the country (not just on fiscal issues, but on social issues and foreign policy, too). But, since he added 10 trillion to the debt, he looks OK. We would have had better fiscal performance in the last eight years if we had elected a honeydew melon as President.