It makes Illinois even less competitive in relation to its neighbors, as well as other states.

As one of the few conservatives arguing for steep hikes in gas taxes (with corresponding LARGER cuts in Social Security tax, mind you) it is clear that the WORST place to enact gas tax hikes is at the state level.

Frankly, if Obama REALLY wanted to do a “stimulus bill” properly, he would phase in steep gas taxes over 2 years (25 cents every 3 months until it gets to about $2.00) and use the proceeds to dole out cash to states on a per capita basis.

He could even ameliorate the bite by getting states to reduce their gas taxes in exchange for federal revenue sharing of the increased gas taxes.

Regardless, I must say that I feel sorry of Pat Quinn. He was left with a mess created not just by Blagojevich and the Democrats, but by 25-30 years of piggish party hacks in both parties who turned Illinois into state bankrupted by pension-seeking public patronage pigs.

His best bet is to triangulate with smart Republicans (assuming there are some) early by hacking spending to the bone fast and early, and take credit for the better financial picture when the election rolls around.

For an excellent primer on “Pigovian Taxes,” go here.