Many U.S. states are set to wrong-headedly enact pro-cyclical policies â€“- spending cuts and tax increases -â€“ as we head deeper into the current recession. That will almost certainly make things worse, forcing the most exposed states to the edge of default, and perhaps beyond. Only then, sadly, will we see the overdue hard choices being made about what we can and should pay for.
With the preceding in mind, here is a heat map of U.S. states compared by current deficits as a percentage of FY 2009 general revenue. California, Arizona, Nevada, and Florida are in the top five (as is Rhode Island, surprisingly), but 41 states now face rapidly growing shortfalls.
[Data via CBPP]