How Democrats went ‘Evita’ on the spending in their solid blue cities and states

Democrats have no ideas of value to sell to voters, so they spend money to buy votes.

In blue cities and states, they spend big, bringing states and cities gargantuan debts and deficits, and never concern themselves for a minute about where the money to pay it back is going to come from. 

Whether it’s green schemes with its cash-to-cronies, bloated union pensions for do-nothing government workers, free five-star hotels, or health care for illegal aliens, or other boondoggles, it’s spend, and spend again.

And why not? Someone else will always bail them out.

So blue-state spenders never, ever worry about their spending. I’m only saying this with confidence because as a financial reporter, I’ve talked to them. This is what they tell me and they don’t worry.

And it’s not just a matter of leaving debts as the next guy’s problem, though that is part of it. Congress, with its state representatives from fiscally responsible states, is onto that game, so they can’t hit up Congress up for an insta-bailout all that easily.

But with a Democrat president in the saddle, Joe Biden being perfect for this, they know they can. They know they can always get the feds, with the power of the printing press, to give them a bailout.

Mitch Daniels, the politics maven of Indiana, explains how they used the Fed this time to keep that that money rolling in and out, in a worthwhile op-ed for the Washington Post:

Alarmingly, though, among its several precedents, the pandemic panic gave birth to a little-noticed action that could open a back door to the bailout vault. In April 2020, for the first time, the Federal Reserve announced it was willing to buy the debt of state and local governments. Among the multitude of “emergency” measures being launched at the time, the action attracted little notice. Even some of the veteran Fed watchers whom I consulted about the topic were unaware that this line had been crossed.

That’s right, COVID was their best friend, not just because of the federal dollars that rolled in, though that was substantial. It was that sneaky little move to get the Fed to buy up their bonds that nobody else wanted to buy, so they could keep spending.

All for COVID’s sake, you see.

He didn’t get into this, but it certainly would explain why they were so desperate to extend COVID and its lockdowns — closed schools; forced masking of toddlers; plexiglass shields for the merchants; gyms, hairdressers, theatres small, (but not large) retail businesses shuttered; and the rest of the entire damaging nightmare for which no one has been held accountable.

It was all about keeping the bailout cash coming so they could keep spending like drunken sailors. With the Feds buying up all the debt they could issue, what did it matter that their tax base was fleeing along with their most productive citizens? The capacity to spend was still supercharged so there was no need to try to persuade those fleeing to stay back. They didn’t need to offer tax cuts or other incentives to try to bring them back, the way troubled states and nations with no recourse do. They had the Fed bailing them out, and the Fed’s money is bottomless.

Daniels says the move sunsetted by the end of 2020 but the damage is done. Blue states and cities have no ideas to sell nor incentive to make life livable for voters in their states because they have the Fed, suddenly wading into the muni debt markets and buying up the bonds normal people won’t buy, artificially inflating their worth.

What an outrage. This is Evita politics at its worst. This is what turned Argentina into a dump, and what made the central bank of Argentina the most hated institution in the country. 

Daniels sees the need for a congressional law here to prevent the Fed from ever pulling this again. There should be no bailouts for profligate free-spending blue cities and states when time comes, and it always will, to pay the piper.

Image: Pixabay / Pixabay License