Posted on 08/07/2014 6:53:42 AM PDT by C19fan
An ambitious plan to cut income taxes in Kansas will end up costing the state more money than it initially estimated after a key ratings agency downgraded the state’s debt on Wednesday.
Standard & Poor’s cited structural imbalances created by the tax cut in its decision to slice Kansas’s bond rating from AA+ to AA. That means Kansas will have to offer a higher interest rate to lenders when it issues new bonds.
The package of tax cuts, backed by Gov. Sam Brownback (R) and his conservative allies in the state legislature, was never offset with equal spending cuts, S&P said Wednesday. The lost revenue is expected to eat up much of Kansas’s budget reserves during this fiscal year; S&P said it expected the state to face a $333 million budget shortfall this year.
(Excerpt) Read more at washingtonpost.com ...
What a moronic article. The difference between issuing 30-year bonds for a AA rating versus a AA+ is pretty much nothing in this market.
Credit rating companies rule the world ... and that is scary.
And now cometh the full court press to convince the low information crowd that nailing their heads to the table (paying more taxes) is really really really a good thing. Having said that, shame on the Kansas legislatures for not having the guts to cut the goodies along with the taxes. Fiscal conservatism, in my opinion, is about doing less with less, not the same with the same.
I agree. Laffer curve, notwithstanding, the recipe to fiscal health is to cut the taxes and spending. I.e., stop bleeding the taxpayers, so they can buy products (which increases employment), and stop spending the taxpayer dollars on whatever social engineering whim passes the desks of the bureaucrats.
That is why the Nation is pretty much doomed -- the elected officials, and their bureaucrat army, will never cut their spending - as that will reduce their power.
No they don’t. S&P refused to downgrade Puerto Rico debt after the island passed a debt restructuring bill. The market couldn’t care less what S&P thought and sold the bonds down in price quite a bit.
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