Pennsylvania Governor Ed Rendell has unveiled his plan to close a $1.6 billion budget gap. Key to the plan is a $450 million bailout from the Federal government. ($900 million over two years.)
It’s becoming clear now. Municipalities go to the state for bailouts. The states go to the Federal government for bailouts. The Federal government borrows money. What could go wrong?
Snark aside, this direction leads to the death of the federal system. We’re headed toward a system where the federal government does all the taxing and distributes the money to the states. Once the “federal” government holds all the purse strings, it will be completely in charge, just as it already is in so many areas wherein the states already depend on the federal government for funding.