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January 4th, 2009

Next Bailout: The States

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You can’t make stuff like this up:

A group of Democratic governors warned Friday that without as much as $1 trillion in federal assistance, many states will not be able to pay their bills in the next year.

“There are states that are talking as California has of not being able to meet their financial obligations in the coming months,” New York Democratic Gov. David Paterson said on a conference call with reporters. California announced in December that all state employees would be forced to take two days of unpaid leave.

Paterson was joined by fellow Democrats, New Jersey Gov. Jon Corzine, Massachusetts Gov. Deval Patrick, Ohio Gov. Ted Strickland and Wisconsin Gov. Jim Doyle in warning that states across the country will be forced to make drastic budget cuts in the face of unprecedented deficits.

“We are not crying wolf. This is one of the worst situations our states have faced,” Strickland said. “This is a real crisis. These are real problems. And if we don’t get some significant assistance many of those in our states will suffer greatly.”

We’re not going to get partisan here, but at some point, certain governors have to wake up and realize that their states, like their citizens, need to live within their means. That’s the job they were elected for. The American people are not an endless source of cash to be milked. We have our own bills to pay; we don’t have the resources to pay other states’ bills.

As the late Senator Everett Dirksen may (or may not) have said: “A trillion here, a trillion there, and pretty soon you’re talking real money” — not to mention deficits into our great-grandchildren’s generation.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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