The predicament of states like New York and California reminds me of a couple who came to see me about their problems. They had been bankrupt twice. They asked me how they could avoid going under a third time.

They owned four vehicles. How about they sell one or two? “Oh, we couldn’t possibly do that. We need the pickup for ...”

How about you cancel your big vacation? “Oh, we need that break to relieve the stress.”

They defended every bit of their spending.

New York and California’s budgets are jokes. They are projecting massive deficits, multi-billions of dollars in the red. Many other states are in the same leaky boat.

And so what do these states do about spending? They increase it. Yes, they spend more.

“Oh, we couldn’t possibly do without ...”

New Yorkers are already the most taxed people in the country. Governor Paterson wants to increase 88 more taxes.  Does he want to cut the state’s spending?  Nah.  He wants to increase it $1.3 billion.

Now think about this.  The country is plunging into recession. New York gets huge revenues from Wall Street and Wall Street is sick. Upstate business and communities have been stagnant for years.  Does this sound like a good time to increase 88 taxes?

Think further.  The state spends billions on gasoline for its fleet of vehicles. Gas prices have plummeted. It spends billions on heating oil. Heating oil prices have plummeted.

The state borrows money. The cost of borrowing has fallen dramatically. The state buys many millions of dollars of food. Food prices have fallen. The state buys thousands of cars and trucks. Car and truck prices have fallen.

With all these prices falling, don’t you think the state might have found ways to cut its budget? After all, it is saving probably billions by way of these lower prices. If the state is not able to cut its budget after all these savings, it must be ratcheting up true spending by a lot more than $1.3 billion.