When You Need the People You Hate

... you're in big trouble. Dig this bit on some of our most profligate states.

Illinois let $5 billion of bills go unpaid. Washington closed state offices. California may cut 200,000 workers’ pay to the minimum wage. Minnesota is delaying tax refunds for a second year.

As fiscal 2011 budgets took effect July 1, state and local governments coping with revenue declines from an economic slowdown are fulfilling legal obligations to balance their books by shaving costs and raising taxes to protect a key constituency: owners of $2.8 trillion of municipal bonds.

I'm not so sure about Illinois, but I know that for quite some time, California has been run by people who love to bash business. While the governor may have gone back and forth between parties (one's party is not always a sign of fiscal prudence), the legislature has not. For decades, our legislature has demonized all things profitable. Corporations, bankers, insurance companies, all of them are polluting fatcats run on greed, making their obscene profits by exploiting the poor.

Oops.

Now that things are growing tight, the same politicians that decried the evil profitmongers and stood up for the little guy are throwing the little guy to the wolves as they desperately woo those same fatcat investors. In the end, they need the money of those investors. They don't dare shut off the spigot of interest payments to their lenders. They know that if they did that, there would be no more lending at all. Instead, those interest payments, all of which are profit, come out of the hides of the people they sought to serve.

“It’s a tremendous amount of pain,” said Illinois Comptroller Daniel Hynes. Schools, foster homes, hospitals and other agencies as well as outside vendors will have to wait for their money until the state raises cash to pay bills, he said ... Lawmakers are willing to anger voters with reduced services and higher taxes to retain the favor of investors, who buy more than $400 billion of state and local debt each year to finance roads and bridges, pay for new schools and maintain parks and libraries.

Whether these same politicians ever meant what they said or if they simply had no idea how the world works is irrelevant. Their world view has been slain by their own hands as they cut payments to foster homes in favor of the investors' profits. A political philosophy is only valuable if it works. If it has to be ditched as soon as a crisis hits, then it's nothing more than windbaggery.