While Ohio and other states were cutting spending two years ago to deal with their budget deficits, Illinois enacted a massive tax hike, a tax hike so significant that it drove hordes of businesses and residents from the state.
Today, we received more reports of the result of that disastrous decision to raise taxes -- coupled with a continued unwillingness to deal with its spending, especially over-spending on overly-generous state pensions. The state creit rating was downgraded to the worst in the nation.
Read it here. That downgrade in the near-term will cost Illinois high interest rates for capital projects.
But this move is potentially more ominous than that. Like the sub-prime lending crisis, one situation of insolvency leads to another and another, ultimately rippling through the financial system with devastating consequences. The politicians and voters are not -- once again -- seeing the canary in the coal mine.
There will be a steep price to pay for all this debt. And the worst is yet to come.
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