Thursday, January 6, 2011

Is Texas the Next Ireland?

The Texas state budget deficit of $25B is the highest of any state. We do not hear much about the Texas problem even though its problem is the most severe. The reason may be that Texas, like Ireland, is a very business friendly state. Taxes are low and regulation is at a minimum. Its not easy to explain the Texas problem by invoking the standard GOP talking points, but it offers a good example of what happens when states are affected by recession and declining tax revenues. The problem is recession, and not out of control spending, which is the GOP explanation for every budget deficit problem.

This article shows how difficult it will be for the GOP controlled state to deal with its huge deficit problem without dealing with the problem of declining revenues. The only alternative would be to cut social programs like education and Medicaid which are the largest programs in the state budget.

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