As the national debt crosses the $16 trillion mark some time in the next few weeks, let’s not forget that this isn’t the whole story as far as public debt is concerned. The 50 states have a cumulative debt of about $4.2 trillion. California is the worst, naturally, with total outstanding debt of $617 billion. Illinois, whose debt rating was downgraded yesterday by S & P, ranks fifth, with $271 billion in outstanding debt, along with an unfunded public pension liability of $83 billion (though likely much higher, as explained in this post a few days ago). Cory Eucalitto of State Budget Solutions thinks the total unfunded pension liability of the states may be another $4 trillion.
One of the amazing things about Illinois is that, like most states, it has a balanced budget requirement, yet has run up a cumulative $44 billion budget deficit over the last five years. This shows how long you can patch together things with accounting tricks, special find raids, and—the best part for the private sector (not)—not paying your bills. Many vendors to the state of Illinois have to wait months for payment.
The problem of failing U.S states is the unspoken issue in this presidential campaign. If Obama is re-elected, look for Obama to demand a bailout of states to be part of any budget compromise with Republicans. Liberals simply can’t let the Blue State model fail.
Now back to Greece. And the Tampa convention.