Thursday, August 19, 2010

State Budget Crisis Interactive Map

Interesting interactive map at the financial times website, here .

This highlights the fiscal picture that is often obscured in our deficits debate. For all the good the stimulus did, it was still rather small, considering the deficits the states were running. As Ezra Klein has
pointed out before, much of the stimulus dollars were used just to get states back to square one when the financial crisis destroyed their balance sheets. Since states are heavily reliant upon consumption and property taxes, and the crisis primarily hit the housing sector and also saw a massive drop in consumption spending, states were in dire need. Here is a good chart showing the states fiscal situation, that Ezra uses in his post:

This is a pretty good depiction of the downward drags facing our economy. With balanced budget amendments, states will have to cut services and jobs, causing further reduction in spending. It's not a question of whether or not stimulus is good or bad, but what are the offsetting measures that could affect the success of a stimulus that are often ignored.

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