Eleven states, including California, have more residents who draw money from the government—as employees, pensioners, or welfare recipients—than people employed in the private sector. This means that roughly one-third of Americans live in states where more people receive tax dollars than pay taxes on non-government income.
Over at Forbes, William Baldwin counsels potential home buyers to avoid “death spiral” Blue States that have more “takers” than “makers.” These states are further doomed by poor credit-worthiness:
[Money manager Conning & Co.] rates North Dakota the safest state to lend money to, Connecticut the most hazardous. A state qualifies for the Forbes death spiral list if its taker/maker ratio exceeds 1.0 and it resides in the bottom half of Conning’s ranking.
It’s easy to see how California got on our list. It has pampered a large army of civil servants while using every imaginable trick to chase private-sector jobs away, the latest being a quixotic scheme to reduce the globe’s atmospheric carbon. A City Journal essay by Victor Davis Hanson notes that the state spends $10 billion a year on entitlements for illegal aliens.
Illinois is especially known for its dishonesty, whether among officeholders (future license plate motto: Land of Corruption) or in the habit of under-accounting for promises to government employees. The Rauh study counted $66 billion in the till to cover pension obligations of $233 billion.
Most of these states’ preferred solution to fiscal woes has been to raise taxes on the dwindling number of rich residents. Attempting to raise more and more money from a shrinking subset of the population is setting these states up for serious trouble in the near future.
It is important to note, however, that rampant government dependence and economic mismanagement are not exclusively blue-state pathologies. Corrupt and crony Republicans can be every bit as sleazy and dangerous as their Democratic counterparts. South Carolina, Alabama and Mississippi are on this list for good reason.
[h/t Zero Hedge]