Euro-fornia and Euro-Nois?

Perhaps California and Illinois should be renamed as Euro-Fornia and Euro-nois. At least that's my view. They're functioning more like European sovereigns than American states these days. Two once great U.S. states are fast becoming two basket cases with no serious efforts underway to "right the ship."

In fact, they seem to be a microcosm of the progressivism laced and unaffordable debt laden Euro-U.S. which is developing in Washington.

A Downgrade for Illinois says this:

"In recent years a wave of new reform Governors has washed over the Midwest, but it did skip a few states. Among them is Illinois, which now has the worst credit rating of any state besides California.

Voters may want to pay attention.

On Tuesday, Standard & Poor's downgraded Illinois bonds to A from A-plus, with a continuing negative outlook. The credit rating agency singled out five years of budget deficits ranging from bad to worse to way worse. It now stands at $44 billion—another national record. S&P was also more troubled than the Springfield political class about $83 billion in unfunded pension liabilities. The legislature ended a special session on pension reform this week without, well, passing any reform.

S&P praised Democratic Governor Pat Quinn's "significant measures in the past two years to improve structural budget performance," meaning his 67% boost in personal income rates and raising the corporate tax to 9.5%. Credit raters never object to tax increases, even if they never solve the budget problem. But that's another story.

The tragedy is that Illinois is surrounded by states showing a better way. For example, all three major raters have been upgrading Ohio's ratings after years of chronic fiscal problems. Governor John Kasich hasn't imposed fearsome austerity—he simply streamlined the budget. Mr. Kasich and other GOP Governors have prominent speaking places at this week's Tampa convention. Will Mr. Quinn next week?"

And Sacramento's Pension Scamble says this:

"Television viewers were treated to a string of speeches (Tuesday) night by reform-minded governors—including Scott Walker of Wisconsin and Chris Christie of New Jersey—who addressed the Republican National Convention in Tampa, Fla. We hope that California Gov. Jerry Brown tuned in because his state could use some pointers.

Mr. Brown announced yesterday that he's reached a deal on pension reform with his fellow Democratic legislative leaders, state Senate President Darrell Steinberg and state Assembly Speaker John Perez. But what took so long?

Last October Mr. Brown proposed a 12-point pension reform plan, which called for shifting new workers to hybrid pensions that include a defined contribution component and require all workers to split the normal cost of their pensions with their employer over time. Mind you, that doesn't include the cost of paying down the state and local governments' one trillion dollar unfunded liability.

Democrats shelved the governor's plan because it was too bold for their labor friends. Plus, they supposedly had more important things on their agenda, such as passing high-speed rail and crafting a new state-administered retirement system for private sector workers. Republicans introduced the plan as legislation in the spring, but it continued to collect dust until a couple of weeks ago when Mr. Brown reminded lawmakers that they were running up against an Aug. 31 deadline, after which all unpassed bills turn into pumpkins.

The biggest impetus behind the pension deal, however, was the governor's income and sales tax initiative this November. Mr. Brown believes that voters will be more inclined to raise taxes if lawmakers show they're earnest about reforming the state fisc. Are they?

The deal is better than many reform advocates anticipated, but that's partly because their expectations for Sacramento are so low. The legislation modestly adjusts payment formulas for new workers and requires new municipal employees to pay half of the normal costs of their pensions. So pension contributions would be taken off the bargaining table, at least for new workers. This should help some municipalities rein in their labor costs, though it won't significantly reduce their unfunded liabilities.

What's more, the legislation will save the state little money in the short-term since it doesn't touch current workers, at least not in any meaningful way. By contrast, reforms recently passed in Rhode Island, New Jersey and Minnesota all affect current workers. So while the reforms aren't significant enough to pull California back from its fiscal cliff, the governor did beat expectations."

Summing Up

Tax and spend, tax and spend and then more tax and spend.

Or if you prefer, borrow and spend, borrow and spend and then more borrow and spend.

Or maybe better yet, we could try some different combinations of the above ways to grow the government and reduce individual freedoms in the ongoing OPM versus MOM story.

Tax and spend, and then delay, seems to be the preferred kick the can process underway in Illinois and California, as well as in Washington today.

But here's the deal. This crap won't work. This dog won't hunt.

It hasn't worked in Europe, it won't work in Euro-Fornia or Euro-Nois, and it certainly won't work in Euro-U.S. either. There are real choices to be made: more government or more personal freedom and responsibiity.

Will We the People force the politicians to adhere to the living within our means set of behaviors so vitally necessary to our nation's health and prosperity, or will we choose the government as saviors false security?

Soon we'll see as taxpayers react to tax increase proposals and government spending reductions, including entitlement spending, in the states and cities across America. And in Washington, too.

Thanks. Bob.