Fate of the States: The New Geography of American Prosperity
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state government indebtedness, 80
subprime mortgage excess in, 82–83
tax rate hike, 9, 166
tax receipt declines, 27–28
tax receipts outpaced by spending, 62
tax revenues, drop in (2008– ), 27
technical/scientific fields decline, 28, 176–77
unemployment, 28, 47, 63–64, 68, 80, 143–44, 164, 177
unfunded pension fund, 102
welfare assistance spending, 138–39
California Public Employees Retirement System (CalPERS), 61, 190
Canada, mortgage loans in, 35–36
Central corridor states, 155–62. See also specific states
agriculture boom in, 199
bids to lure business/people to, 171–81
consumer credit gains in, 76
consumer debt, lack of, 84
corporations moving to, 63–64, 156–57, 166–68, 170–80
debt-to-income per capita (2011), 81, 162
economic boom in, 63–64, 109–11, 155–62, 198–201
education spending increase, 132–33
financial stability of, 7–8, 29, 75–76, 109–10, 178–80
as future economic leaders, 157–58, 198–201
jobs/employment growth in, 8, 63–64, 155–62, 167–73
manufacturing revival in, 8, 17–18, 25, 109
oil and gas production, 158–61
population inflow to, 27–29, 63–64, 110, 157, 163–64
small business growth in, 162
tax rate cuts in, 201
Chicago, consumer credit collapse, 75
Citigroup, 4
Coal industry, 23
Coastal states. See alsoHousing-bust states
population flight from, 27–29
real estate asset inflation in, 26
Community Reinvestment Act (1994), 43
Connecticut
library cuts, 126–27
population flight from, 176
tax rate hike, 69, 176
unfunded pension fund, 102
Construction companies, unemployment problem, 80, 142–43
Consumer credit
creditworthiness and homeownership, 73–74
new lenders, types of, 85–86
unused lines as safety net, 76–77, 83
Consumer credit cuts, 76–80
economic disruption from, 7, 76–77, 79
limit on access to (2007– ), 5–7, 10, 50, 75–77
small businesses, impact on, 45, 79–80
Consumer debt
in central corridor states, 84
credit cards, amount on (2008), 75
debt per capita in states, 81, 83–85
home-based debt. SeeHome-equity loans; Mortgage loans
and homeowners, 45, 74–75
most overburdened states, 6–7, 74, 80, 83–85
Corporations, move to central corridor states, 63–64, 156–57, 166–68, 170–80
Cotton production, 20
Countrywide, 40, 41–42
Credit, consumer. See Consumer credit;Home-equity loans; Mortgage loans
Debt, consumer. See Consumer debt
Demographics. See Population shifts
Detroit
boom-and-bust cycle, 23–25
population flight from, 181
Dot-com crash, 37–38, 59
Down payments, 33
Downsizing, as financial rescue, 145–46, 150
Dumb money, 167
Economic multiplier effect, 43–44, 50, 80
Education cuts, 119–24. See also specific states
extent in U.S., 73, 119–20
forms of, 58, 121–22
higher education, as discretionary expense, 119–20, 122
parental choices, 120
and tuition cost increase, 123
Employment. See also Job creation
in central corridor states, 8, 63–64, 155–62, 167–73
during housing boom, 43–44
losses after crash. See Unemployment
inright-to-work states, 166–67
European Union (EU), privatization in, 147–48
Fannie Mae, 36–37, 43
Federal Deposit Insurance Corporation (FDIC), 36
Federal government
federal-to-state money transfers, 67–69, 70
fiscal cliff, 140
homeownership, promotion of, 33–39, 42–43, 50–51
poverty-related assistance, 138–40
Federal Housing Authority (FHA), 34, 35, 36
Financial collapse (2007– ). See also specific topics
and consumer credit collapse, 5–7, 10, 50, 75–77
financial industry losses, 4–5
and irresponsible lending practices. See Housing bust;Mortgage-backed securities; Subprime loans
loan originators, collapse of, 41–42
and poverty, 135–45
recovery, regional differences, 8, 156, 165–73
retirement plan losses, 94, 97
and state/local governments. See Central corridor states;Housing-bust states; Local governments; State governments
stock market losses (2008), 94
and unemployment, 7, 9, 141–44
Fire department cuts, 131
Fiscal cliff, 68, 140
Florida
bid to lure business/people to, 174–76
boom-time spending excess, 57
consumer credit collapse, 75
education cuts, 59
financial recovery tactics, 175
home price decline, 47–48
housing boom in, 44–47
population inflow to, 168
poverty level in, 137, 141
tax receipts outpaced by spending, 63
unemployment, 141, 143–44, 169
welfare assistance spending, 139
zero state income tax, 165–66, 175
Flyover states. See Central corridor states
Food stamps, 138, 144
Freddie Mac, 37
Gambling, 69
General-obligation bonds. See also Municipal bonds
new issues (2010– ), 70–71
Geographic mobility. See Population shifts
Georgia, housing bust impacts, 87–88
Ghost towns, 19–20, 25
Global view
homeownership/mortgages, 35–36
privatization of services, 146, 147–48
U.S. as global competitor, 17, 161
Golden West Financial, 40, 41
Governmental Accounting Standards Board (GASB) rules, 53, 91, 95
Government-sponsored enterprise (GSE), 36–37
Great Depression, 6, 33
Great Recession. See Financial collapse (2007– )
Greenspan, Alan
connection to securitization, 39
interest rate cuts by, 38
as proponent of ARMs, 38–39
Home-equity loans
during boom, 74
inappropriate use of, 43, 46
limited access, post–2007, 76–77
small business use of, 7, 79
Homeownership
during boom, 43, 44, 45, 73
and creditworthiness, 73–74
economic multiplier effect, 43–44, 50, 80
federal government promotion of, 32–43, 50–51
global view, 35–36
Home Owners’ Loan Corporation, 34
Home price decline
negative equity created by, 7, 79, 86, 108, 162
and property taxes, 78–79, 88
reverse wealth effect, 88
states with highest rate, 47–48, 80, 87
Homestead Act (1862), 32
Housing boom, 43–47
booming states, 26, 44, 82
consumer debt during, 45
economic era of, 25–26, 44–47
economic ripple effect of, 43–44, 81–83, 143
homeowner misperception during, 46
ho
me price escalation, 44–45
irresponsible lending during. See Subprime loans
new homeowners, statistics on, 43, 44, 45, 73
property tax increase during, 81–82
and retirement age buyers, 18–19, 26
state spending excess during, 9–11, 46, 49, 56–63, 81–82
Housing bust, 47–51
and consumer credit collapse, 5–7, 10, 50, 75–77
home price decline, 47, 75, 78–79, 88
loan originators, collapse of, 41–42
negative equity created by, 7, 79, 108, 162
progression of, 47, 82
states, overall impacts on, 6–11, 49, 57–59, 88
states negatively impacted. SeeHousing-bust states
states not affected by. See Central corridor states
and unemployment, 7, 9, 142–44
Housing-bust states. See also specific states
bankrupt cities/municipalities, 186–93
debt per capita in, 81, 83–85, 162
Greek crisis compared with, 116
list of, 6–7, 26, 44
population flight from, 27–29, 63–64, 157
public services decline in, 9, 10–11, 26–27, 110
states with contraction versus collapse, 87
assubprime-loan targets, 7
total liabilities (2011), 111–13
Illinois
consumer debt, average in, 169
debt per capita in, 96
education cuts, 123
pension-obligation bond debt, 103–4
tax rate hike, 9, 69, 173
Indiana
bid to lure business/people to, 172–74
consumer debt, average in, 169
corporations moving to, 171
debt per capita in, 96
education spending increase, 132–33
financial recovery tactics, 145–46, 149–50, 174
mobile capital investment in, 169
privatization of services in, 145–46, 149–50
Industrial Revolution, 20–22
Infrastructure
new, in central corridor states, 200–201
privatization of services for, 145–46, 147–48
Iowa
consumer credit gains in, 76
economic boom in, 109, 156, 180
Jefferson County (Alabama) bankruptcy, 65, 187–89
Job creation
in bad economy, 202–3
and job training, 144–45, 202–3
and privatization, 145, 149
Job training
cuts to programs, 124, 140
necessity for, 144–45, 202–3
JPMorgan Chase, 41
Kentucky, poverty level in, 141
Las Vegas
home price decline, 108
housing boom in, 107–8
population flight from, 181
subprime mortgage excess in, 86
Lehman Brothers, 47
Libraries, cuts and closings, 124–27
Local governments
programs/services cutbacks, 55
property tax hikes, 66, 69
public service delivery by, 66
revenue, sources of, 64, 66
state government transfers to (2010), 67
state revenue cuts to, 55, 64, 72, 110
Lottery laws, 69
Louisiana
corporations moving to, 173
economic boom in, 156
employment growth, 169
oil and gas production, 159
personal income growth in, 159
poverty level in, 137, 141
Mammoth Lakes (California) bankruptcy, 114, 190–91
Manufacturing jobs
decline of, 5
rise in central corridor states, 8, 17–18, 25, 109
Maryland, tax rate hike, 69
Massachusetts
boom-and-bust cycle, 20–23, 25
boom-time spending excess, 58
education cuts, 58
Medicaid
federal aid to states for, 138
increase in enrollees/expense, 59, 65, 119
Michigan
education cuts, 123
emergency management measures, 114, 140–41
library closings, 125–26
poverty level in, 137
welfare assistance spending, 139
Mississippi
boom-and-bust cycle, 20, 32
poverty level in, 135–36, 141
tax-supported liabilities of, 136
Mobile capital investment, 169
Mortgage-backed securities
collapse of market, 3–6, 48
creation and sale of, 2–3, 40, 82
Greenspan connection to, 39
Mortgage loans
adjustable-rate. SeeAdjustable-rate mortgages (ARMs)
Canadian system, 35–36
interest tax deduction, 35
irresponsible lending. See Subprime loans
loan modification programs, 34
postcollapse conditions for, 48–49
in U.S., historical view, 33–43
Municipal bankruptcy
bankrupt cities/municipalities, 60–61, 113–14, 186–93
priority payments after, 106, 186, 187, 192
Municipal bonds
bankruptcy and payouts, 106, 186, 187, 190
defaults on, 114–15, 183–84, 195–97
new issues (2010– ), 70–71
payouts by state residents, 77–78, 198
as revenue source, 65, 71
Nebraska, economic boom in, 156
Negative equity
defined, 7, 108
states with, 79, 86, 108, 162
Nevada
boom-time spending excess, 56
consumer debt problem, 74
education cuts, 108–9, 117
home price decline, 87, 108
home price escalation, 108
housing boom in, 45–47, 107–8
housing bust impacts, 108–9
mortgage credit, limits on, 86
negative equity in, 86, 108
poverty level in, 137, 141
state budget cuts, 55
state budget deficit, 108
subprime mortgage excess in, 86
tax rate hike, 69
unemployment, 47, 141, 143–44, 169
unfunded pension fund, 102
zero state income tax, 165–66
New Hampshire, S&L crisis, 49
New Jersey
consumer debt, 80, 169
education cuts, 123
housing boom in, 45
pension fund borrowing by, 62, 101
property tax, highest in U.S., 164–65, 169
state government indebtedness, 80
unfunded pension fund, 98–99, 104
New Mexico, poverty level in, 141
New York
fracking debate, 159
housing boom in, 45
pension fund health of, 102
state budget cuts, 55
tax receipts outpaced by spending, 62–63
New York City
consumer credit collapse, 75
population flight from (1950–1980), 180–81
public employees, excess payments to, 11
NINJA loans, 41
North Carolina
corporations moving to, 173
education cuts, 59
job creation in, 202–3
mobile capital investment in, 169
North Dakota
economic boom in, 109–10, 155–56, 180
employment growth, 159, 161, 169, 199
housing shortage in, 199
oil and gas production, 155, 158, 159, 161
personal income growth in, 159
Ohio
mobile capital investment in, 169
poverty level in, 137
unfunded pension fund, 104
Oil and gas production, in central corridor states, 158–61<
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Oklahoma
corporations moving to, 171
employment growth, 161, 169
oil and gas production, 159, 161
Orange County (California) bankruptcy, 186–87, 197–98, 201
Pawn shops, 85–86
Pennsylvania
boom-and-bust cycle, 23, 170
consumer debt, average in, 169
mobile capital investment in, 169
oil and gas production, 159
taxes, low in, 168–69
Pension funds. See Public employee pension funds
Pension-obligation bonds, 103–4, 184, 189–90
Personal income growth, states with, 159–60
Plath, Tony, 42
Police department cuts, 129, 131–32, 190
Population shifts
andboom-and-bust cycles, 19–20, 25, 169–70
to lower taxation regions, 168–69, 171
migration to central corridor states, 27–29, 63–64, 110, 157, 163–64, 177
to Sand States, during boom, 82
state tax receipts, impact on, 27–29, 63
Poverty, 135–45
breaking cycle, actions for, 144–45
high-poverty states, 135–37, 141
rate comparison (2000 and 2010), 142–43
and unemployment, 137–38, 141–44
Poverty assistance
dependency created by, 140, 144
federal aid/costs related to, 138–40
program expirations (2013), 140
states with highest, 138–39
Prison system cuts, 129–30
Privatization, 145–51
arguments against, 149–50
assets to privatize, 145–48
economic advantages of, 145–49
of education, 140–41
global examples, 146, 147–48
Indiana example, 145–46, 149–150
job creation through, 145, 149
of state park operations, 69–70
of waste collection, 128–29
Property taxes
cap on, California, 61–62, 132, 171
as factor in home purchase, 79, 168–69
highest in U.S., 164–65, 169
hikes after housing bust, 66, 69
and home price decline, 78–79, 88
increase during boom, 81–82
as local government revenue, 64, 66
and public services, 7, 27, 66, 128
Public employee pension funds, 89–106
arguments against high payouts, 91–93, 190, 192–93
cost-of-living adjustments (COLAs) on, 96, 97–98
crowding out of state budget by, 92–93, 104–5, 115
disclosure on unfunded debt (2008–2011), 91, 95, 101–5
financing of, 97–100
future scenario for, 115
investment returns, accounting tricks for, 100–101
pension-obligation bonds, 103–4, 184
priority over other spending, 92, 115, 192
reforms, types of, 102, 105–6, 184–86, 193
responsible states, 102
running out of money prediction, 96
state borrowing from, 62, 65, 95–96, 101, 102–3