HIGH-TAX, HIGH-SPEND MODEL STILL DOES NOT WORK

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If states had just kept their spending growth the same as population growth plus inflation between 2002 and 2007, they could have maintained all their services and still provided a $500 billion tax cut.

Political pressure, especially from government employee unions, is a big part of the reason why states do not have anything in reserve; state legislatures, for instance, have lavishly enhanced pension benefits, but state employees should have little confidence that the states will ultimately make good on those promises.

Only 9 percent of state pension plans have enough assets to be considered safe according to government standards.

Many state legislatures, unwilling to take on the well-organized lobbies for government spending, have resorted to raising taxes on the rich. However, that will only exacerbate the boom-and-bust budget cycles, as Maryland's experience demonstrates...

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