Red States Rising

It's ironic that at the federal level we are struggling with a moribund economy due to heavy handed regulations, enormous fees, mandates, and always increasing taxes, while at the same time a number of states are bucking that trend in spite of the federal economic wet blanket.

Blue states are suffering as demands upon their financial resources increase even as their ability to meet them dwindles. Red states, on the other hand, are seeing their economies grow as an influx of new businesses and hard-working residents that have fled the crushing anti-business atmospheres of the blue states.

Red states are rising. But blue states, shackled with exorbitant union demands and pension obligations, high taxes and anti-fossil-fuel policies, are sinking. Americans are fleeing these Democratic bastions, uprooting their families and resettling in areas with economic opportunity.

Folks are voting with their feet to live in areas that are low-tax, pro-business and allow job-producing fossil-fuel production. The Census shows that from 2000 to 2010,Americans fled Democratic-controlled East Coast, West Coast and Great Lakes states.

The population shift continues, and the biggest population losers are New York, California and Illinois.The eight states where the most Americans are choosing to relocate are Florida, Texas, Arizona, North Carolina, Georgia, Nevada, South Carolina and Tennessee. All have GOP governors.

I wish I could say that my home state of New Hampshire were among those red states. However, with democrat governor and a Democrat majority House, it is likely we will see a return to the tax-and-spend days that led to our little state to have an $800 million structural budget deficit a few years ago. The only thing that kept it from growing worse was a blowout during the 2010 mid-term elections that saw the GOP take a super-majority in the New Hampshire House, Senate, and Executive Council. During the two years the GOP held the legislature, budget cuts and reality-based revenue projections brought the state budget back into balance. A number of punitive fees and taxes laid upon small businesses during the recession were repealed. All of this led to a small but noticeable recovery of our economy. Too bad the Democrats rode Obama's coattails back into power, at least in the New Hampshire House.

Our governor, Maggie Hassan, proposed a budget that included revenues from a non-existent source, that being $80 million in licensing fees from a new casino to be built in southern New Hampshire. The only problem with those projected revenues is that casino gambling isn't legal in New Hampshire, at least not yet. Call it typical blue-state economic arrogance that it is assumed the legislature will roll over and give the governor what she wants. And while it looked like she might get their way, the enabling legislation is in trouble and might not pass during this session. So how does the legislature make up the $80 million revenue shortfall? Will they cut spending by that much or will they raise other taxes and fees to make up for it? If I had to guess, they'll raise taxes and fees elsewhere.

OK, enough of my home state-centric rant.

The blue state governments are trapped into a thought mode that ignores economic realities such as believing the taxpayers are a bottomless supply of money that can be tapped at will without there being any economic repercussions. But as we have been seeing over the past few years, that isn't true. As the blue states squeeze businesses and individuals for more revenue and lay heavier regulatory burdens on business, people are voting with their feet, moving to states with friendlier business climes and lower tax burdens. That leaves an even larger revenue shortfall which in turn causes the state government to lay a heavier burden on those remaining. They're trying to take more from shrinking pie. It's a vicious cycle.

Red state governments realize the folly of excessive taxation and regulation, understanding the negative effects of those factors on the health of their economies. That also understand that tax revenues climb as the economy expands, a fact that seems to elude the political class in blue states. We can only hope they'll learn that lesson before their fiscal house of cards collapses...but somehow I doubt they will.