With all the deficit Armageddon talk in nearby Washington, DC, you might expect that Virginians would be all doom and gloom too. After all, if federal spending is really such a bad thing and Virginia gets the "brunt" of all that badness, shouldn't things be terrible in the Commonwealth?
Well, no.
Virginia is doing great economically and financially. Virginia's state budget finished the year with a $350 million surplus which is only down slightly from the $400 million surplus it achieved last year. Higher tax revenue is the reason, even though Virginia did not raise tax rates or close any loopholes. Virginia has a AAA bond rating from Wall Street too.
[H]igher tax revenue — 5.8 percent growth in fiscal year 2011, instead of a forecast 3.5 percent — is the main reason for the surplus. It is the first year since 2008 that state revenue has increased over the previous year.
http://www.washingtonpost.com/...
Of course this higher tax revenue is the result of increased employment - Virginia's unemployment rate is is only 6% - and higher revenue from businesses. So housing prices are also rising and foreclosures are falling.
What has created all this good news? That is where the Bad News starts: your tax dollars at work!
Yes, Virginia's prosperity is built on its lion's share of federal spending which now may dry up.
If the federal debt limit is not raised by Aug. 2, the U.S. government would not have enough money to pay all its obligations. As a result, payments to federal employees, retirees, service members and retirees could be pared dramatically. In addition, many government contracts could be suspended, potentially dealing a setback to hundreds of companies in the Washington region.
As a result, Moody's Investor Services has threatened to downgrade Virginia's credit rating causing our Republican Governor to go nuts.
“Through no fault of our own, we have a AAA bond rating since 1938 that we have been informed just hours ago may be in jeopardy and put on the watch list,” Virginia Gov. Robert F. McDonnell (R) said at a news conference in Richmond. “I’m very unhappy. In fact, we’re furious.”
Yes, Bob McDonnell is "furious" but he still favors cutting federal spending:
“Every family in America, every business in America knows you can’t spend more than you take in for a sustainable period of time or you’ll go broke. (Unless you can print money in the basement like the U.S. government) Apparently they don’t understand that in Washington, but for the last 30 years that’s what they have done. (More like 80 years, but who's counting) Frankly it’s been Republican and Democrat presidents and congresses that have contributed to the spending.” (Why didn't we hear about it when George W tripled the deficit?)
McDonnell said he supports cuts in every area of the federal budget, but does not support raising taxes.
http://www.washingtonpost.com/...
Maybe Bob has cognitive dissonance. How else does he not get it that federal spending is essential to Virginia's economic prosperity? While most all of the other 49 states are suffering through terrible economic times, somehow that obvious truth has escaped everyone in Washington and the rest of the U.S. All they need to do is look at Virginia.