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Yes, because when California almost went bankrupt in 2012 all they had to do was call Pennsylvania, who then promptly wrote a check for 1/2 of California's GDP,
by roel_v 11y ago
Yes, because when California almost went bankrupt in 2012 all they had to do was call Pennsylvania, who then promptly wrote a check for 1/2 of California's GDP, and then said a few years later, when California still hadn't fixed its ridiculous retirement fund shortfalls, 'Nah you know what, you have nice beaches we visit every now and then, let's call it even.'
Oh no wait, they didn't - and the amount of federal funding even New Mexico gets is dwarfed (per GDP) by the deficit the Greeks were trying to roll over - again. How many US states fail to collect 25 to 40% (depending on what you count) of taxes? If there were any, how long do you think other states would keep that state afloat?
- parasubvert 11y agoIt isn't up to the individual states. The Feds can and do keep various states afloat through a variety of transfer institutions. Texas in the 1980s had to get a bailout of over 30% of its GDP due to the Savings and Loan crisis and resulting (ahem) debt forgiveness by the FDIC. New York certainly got a massive injection from the Central Bank during the fall of Long Term Capital Management. Mississippi and Alabama have been net benefitors from taxpayers in other states via entitlement programs for a generation now.
- RobertoG 11y agoWhen California goes bankrupt the federal government spend more money in California. This is automatic. This doesn't happen in the Euro area. In fact, the opposite happens: Brussels force the country to spend less.