Most U.S. States Aren’t Prepared For the Next Recession

Just 16 states have adequate backup money on hand, according to a new Moody’s Analytics analysis

If the next recession hit the U.S. this year, more than a quarter of states would be financially unprepared to weather even a moderate downturn, according to a new report.

Fifteen states would struggle in the case of a recession-related tax revenue slump and spike in demand for services, such as Medicaid. They are more than 5 percentage points below the share of funds left in their budgets they would need to tap, according to a new Moody’s Analytics analysis. Another 19 states narrowly fall short.

Just 16 states have adequate backup money on hand, with Alaska having almost three times as much as the state would need to keep its economy buoyant.

 

STATE
EXTRA CASH ON HAND
NECESSARY BACKUP FUNDS
DIFFERENCE BETWEEN EXTRA CASH AND NECESSARY BACK-UP FUNDS
Louisiana3.10%27.20%-24.00%
North Dakota0.70%20.10%-19.40%
Oklahoma4.00%16.00%-12.10%
New Mexico-1.10%10.00%-11.10%
Illinois0.40%11.10%-10.70%
Colorado5.30%15.10%-9.80%
New Jersey1.40%11.00%-9.60%
Pennsylvania-1.80%6.90%-8.80%
Missouri5.40%13.80%-8.40%
Kansas1.60%9.20%-7.60%

The Republican Party Must Answer for What It Did to Kansas and Louisiana

Wouldn’t it be important for those candidates to explain why their program wouldn’t fail the country in the same way it had failed the Green Mountain State? If you think yes, then you should demand that Donald Trump, John Kasich, and Ted Cruz explain why their tax policies won’t fail America in the same way they’ve failed the people of Kansas.

.. In 2010, the tea-party wave put Sam Brownback into the Sunflower State’s governor’s mansion and Republican majorities in both houses of its legislature. Together, they implemented the conservative movement’s blueprint for Utopia: They passed massive tax breaks for the wealthy and repealed all income taxes on more than 100,000 businesses. They tightened welfare requirements, privatized the delivery of Medicaid, cut $200 million from the education budget, eliminated four state agencies and 2,000 government employees. In 2012, Brownback helped replace the few remaining moderate Republicans in the legislature with conservative true believers. The following January, after signing the largest tax cut in Kansas history, Brownback told the Wall Street Journal, “My focus is to create a red-state model that allows the Republican ticket to say, ‘See, we’ve got a different way, and it works.’ ”

.. The Koch-backed Kansas Policy Institute predicted that Brownback’s 2013 tax plan would generate $323 million in new revenue. During its first full year in operation, the plan produced a $688 million loss. Meanwhile, Kansas’s job growth actually trailed that of its neighboring states. With that nearly $700 million deficit, the state had bought itself a 1.1 percent increase in jobs, just below Missouri’s 1.5 percent and Colorado’s 3.3.

.. This data is not lost on the people of Kansas — as of November, Brownback’s approval rating was 26 percent, the lowest of any governor in the United States.

.. Leaving aside the low bar the Texas senator sets for himself — my giveaway to the one percent will cost a bit less than the Iraq War! — Cruz only stays beneath $1 trillion when you employ the kind of “dynamic scoring” that has consistently underestimated the costs of tax cuts in Kansas. Under a conventional analysis, the bill runs well over $3 trillion, with 44 percent of that lost money accruing to the one percent. John Kasich’s tax plan includes cutting the top marginal rate by more than ten percent along with a similar cut to the rates on capital gains and business taxes.