I have to agree with pretty much everything in your post.
It proves my theory that borrowing to spend for consumption
instead of investing will lead you to bankruptcy.
It is significant that most of the states in dire straits are run by
democrat majorities.
Yes, it is significant that the states in the most dire structural financial messes are run by Democrats. If the GOP stands back away from the governor’s seat in CA, they could make a solid claim that the Democrats are responsible for the five biggest basket cases of the 50. I’ve maintained that the GOP should never have recalled Grey Davis, because the structural problems began all the way back in the 2000 legislature, when they spent a windfall in tax revenues from the dot-com non-qual stock grants that people were exercising in ‘98, ‘99, and ‘00.
Come ‘01, the tax revenues suddenly disappeared and the state’s finances started downhill like a Flexible Flyer sled on a sheet of ice. Unless the legislature rescinds the retirement and wage package(s) handed out to the public employees, the current tax revenue and CalPERS pension investing returns cannot keep up with the size of the draw on the state budgets.
Illinois is in even deeper troubles, if one can imagine that. Michigan is a well known basket case, NY State will not be able to close their budget problems as Wall Street contracts.
The fifth state in my list might surprise people: Oregon.