Interesting, thoughtful perspective. But the Trump admin wont be showing any “tough love”; it will be vengeful. So yes maybe the blue cities will have to improve their primary surpluses (with fewer Fed below the line transfers to rely upon) but this will be counteracted by Trump blocking access to FEMA, which is a form of federal insurance against unanticipated shocks (fire, floods, hurricane). The blue cities and states will be in the position of homeowners who pay their insurance premiums (the taxes we send to DC) and see their claims rejected. Yes the blue cities and states can issue cat bonds which means they will be paying twice for the same coverage.
Interesting, thoughtful perspective. But the Trump admin wont be showing any “tough love”; it will be vengeful. So yes maybe the blue cities will have to improve their primary surpluses (with fewer Fed below the line transfers to rely upon) but this will be counteracted by Trump blocking access to FEMA, which is a form of federal insurance against unanticipated shocks (fire, floods, hurricane). The blue cities and states will be in the position of homeowners who pay their insurance premiums (the taxes we send to DC) and see their claims rejected. Yes the blue cities and states can issue cat bonds which means they will be paying twice for the same coverage.