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Apr 16 2020

Blue States Will Pay for COVID-19 Lockdowns

The crushing of our wealth and freedom in the name of the Chinese virus has been largely a state and local issue. Authoritarian regional governments have made the crisis worse; Grady Means predicts they will pay a heavier price. Due to shutdowns,

Tens of millions have lost jobs, homes, savings and retirement incomes that will never return. Owners of rental property will go under when their loan payments come due and renters can’t pay. Across the country, state and local economies are being badly damaged — many of them permanently.

As a result of less wealth being generated, government revenues will plummet. Liberal politicians will respond by raising taxes. Bad idea.

The resulting increased tax burden would be a disaster. Businesses that were barely hanging on would go under. Workers and homeowners who were barely surviving would go under. State and local tax bases would collapse even faster.

In desperation, wealth-generators will depart for the states that don’t bleed them dry.

The only answer for the states, counties and cities that want to survive is to slash budgets now — probably 30 to 50 percent — eliminate all nonessential spending and reduce taxes today. Business leaders know that, in these types of situations, the only way to save a company is to cut costs immediately. There is no other answer, and those who act first and most aggressively are the most successful in saving the company and the greatest number of its employees. In short, “fiscal distancing” — that is, separating politicians from taxpayers’ money by cutting budgets and taxes now — is literally the only useful thing that state and local governments can do to prevent further economic and social catastrophe.

The odds of any Democrat administration taking this approach are nil. Already, people have been pouring out of overtaxed, overregulated blue states in favor of red ones. This may escalate dramatically in the aftermath of the Wuhan virus panic.

On a tip from Stormfax.

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