Many of our friends on the left have been wedded to the outmoded notions of Keynesian economic thought, telling us that the key to economic recovery is for more government spending, financed by increased taxes on the higher producers, and more borrowing if necessary. Well, at least one state has followed their ideas. From 
The Greece Next Door
Illinois gets a credit downgrade, in contrast to Wisconsin.Run up spending and debt, raise taxes in the naming of balancing the budget, but then watch as deficits rise and your credit-rating falls anyway. That’s been the sad pattern in Europe, and now it’s hitting that mecca of tax-and-spend government known as Illinois.
Though too few noticed, this month Moody’s downgraded Illinois state debt to A2 from A1, the lowest among the 50 states. That’s worse even than California. The state’s cost of borrowing for $800 million of new 10-year general obligation bonds rose to 3.1%—which is 110 basis points higher than the 2% on top-rated 10-year bonds of more financially secure states.
This wasn’t supposed to happen. Only a year ago, Governor Pat Quinn and his fellow Democrats raised individual income taxes by 67% and the corporate tax rate by 46%. They did it to raise $7 billion in revenue, as the Governor put it, to “get Illinois back on fiscal sound footing” and improve the state’s credit rating.
So much for that. In its downgrade statement, Moody’s panned Illinois lawmakers for “a legislative session in which the state took no steps to implement lasting solutions to its severe pension underfunding or to its chronic bill payment delays.” An analysis by Bloomberg finds that the assets in the pension fund will only cover “45% of projected liabilities, the least of any state.” And—no surprise—in part because the tax increases have caused companies to leave Illinois, the state budget office confesses that as of this month the state still has $6.8 billion in unpaid bills and unaddressed obligations.
Much more at the link.
The article continues to note that neighboring Wisconsin, Governor Scott Walker (R-WI) and the Republican-controlled legislature imposed some rather unpopular economic measures, including stripping public-employee unions of bargaining power on some issues, and requiring public employees to pay a larger share of their health care and pension costs. The results? Well, six Republican legislators faced recall elections (and two of them lost their seats), and now Governor Walker is facing a recall election. But, even though many of the cheeseheads on the left don’t like the Republicans, the Governor and the state legislature balanced the budget without raising taxes, and rose to 17th, from 41st, in Chief Executive Magazine’s ranking of the states’ business climates, while the Democrats running the Land of Lincoln helped push Illinois from 45th to 48th.
This being a democratic representative republic, the voters will have their way, and it may be that the Democrats and their union allies will force Governor Walker from office. But the Governor and the state legislature put Wisconsin on the right budget path, as reflected by the state’s stronger economic showing, especially when compared to their neighbor to the south.
I wrote about this last August, and John Hitchcock addressed the issue last January and March. The Wall Street Journal noted Governor Pat Quinn’s (D-IL) remarks upon the tax increase vote:
The state was careening toward bankruptcy, fiscal insolvency. We’re in a period now of reform and recovery.
For some apparently unknown reason, Governor Quinn’s remarks do not seem to have been matched by reality. Your editor wonders why that is.
The Wall Street Journal
[...] as the First Street Journal reports, Illinois received a credit downgrade. Run up spending and debt, raise taxes in the naming of balancing the budget, but then watch as [...]
What’s worse is they raised taxes and people and businesses are fleeing like a sinking ship. And think, it is BO’s Home State. First the USA gets downgraded with BO as president, then the state with his home, and was a state senator, and then a US Senator. What common denominator is there????
Massive tax increases on the productive never produce the revenue the Leftist adherents claim they will. But those tax increases do cause great economic harm in the loss of jobs, income, productivity, independence. Same as it ever was.
“Many of our friends on the left have been wedded to the outmoded notions of Keynesian economic thought, telling us that the key to economic recovery is for more government spending, financed by increased taxes on the higher producers, and more borrowing if necessary. Well, at least one state has followed their ideas.”
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An economic or financial policy is called ‘countercyclical’ (or sometimes ‘activist’) if it works against the cyclical tendencies in the economy.[1] That is, countercyclical policies are ones that cool down the economy when it is in an upswing, and stimulate the economy when it is in a downturn.[2]
Keynesian economics advocates the use of automatic and discretionary countercyclical policies to lessen the impact of the business cycle. One example of an automatically countercyclical fiscal policy is progressive taxation. By taxing a larger proportion of income when the economy expands, a progressive tax tends to decrease demand when the economy is booming, thus reining in the boom.
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http://en.wikipedia.org/wiki/Countercyclical#Meaning_in_policy_making
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No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
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http://www.archives.gov/exhibits/charters/constitution_transcript.html
[Released from moderation queue @ 1758 -- Editor.]
Democrats don’t care about the people who get injured in destructive socialist nostrums. For Democrats the economic prosperity of individuals, just like their individual political freedom, takes a back seat to the centralized bureaucracy of the Leftist elite.
After all, for collectivists the State must always be supreme over the individual, it’s what makes them and their political systems so un American.
But, Mr Hitchcock: you are not a college-educated economist, and certainly do not have your PhD. How, then, can we reasonably take your word for what will happen economically, just because you got it right in the instance above?
Miss Nova quoted:
Given that you directly quoted this part, may we assume, for the purposes of argument, that you agree that progressive taxation dampens economic activity? If this is the case, wouldn’t that mean that President Obama’s call for increased taxes on the higher earners, in this time of too slow economic growth, would be counterproductive?