The next big economic crisis - TheHill.com
Many say that the situation in Greece is a harbinger of what is coming to the United States. They are right. But first it will come to states like New York, California and Michigan that are stretched way beyond their means and deeply in debt.
Until now, the problems in these states have been papered over by federal aid. Essentially, Washington has relieved these states (and the local governments they fund) of their constitutional obligations to balance their budgets by giving them welfare checks in the nick of time. Obama now seeks to pass $50 billion in additional welfare to the states.
But since these federal funds are not necessarily recurring — and the jobs and obligations they fund are — they simply enlarge each year’s deficit hole and enable the states to go more deeply into the red.
Many say that the situation in Greece is a harbinger of what is coming to the United States. They are right. But first it will come to states like New York, California and Michigan that are stretched way beyond their means and deeply in debt.
Until now, the problems in these states have been papered over by federal aid. Essentially, Washington has relieved these states (and the local governments they fund) of their constitutional obligations to balance their budgets by giving them welfare checks in the nick of time. Obama now seeks to pass $50 billion in additional welfare to the states.
But since these federal funds are not necessarily recurring — and the jobs and obligations they fund are — they simply enlarge each year’s deficit hole and enable the states to go more deeply into the red.
Dick Morris, Says what he means, means why he says.
NY state debt in red zone, should cut $20 billion: study
(Reuters) - The $120 billion that New York state owes in debt, health and pension benefits for public workers puts it in the danger zone, and getting down to the safety zone requires a $20 billion cut, a study said Tuesday
New York's ability to pay its bills was estimated at a ratio of 1.099, meaning that for every dollar of resources it has,
there are $1.099 worth of obligations.
New York's public authorities have over $80 billion in debt that is not backed by state revenues, according to the
state comptroller's most recent analysis, posted on his web site: here
State Debt Woes Grow Too Big to Camouflage
California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.
And states are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis.
Some economists fear the states have a potentially bigger problem than their recession-induced budget woes. If investors become reluctant to buy the states’ debt, the result could be a credit squeeze, not entirely different from the financial strains in Europe, where markets were reluctant to refinance billions in Greek debt.
The state’s economy will also be weighed down by the ballooning federal debt, though California does not have to worry about those payments as much as its taxpaying citizens and businesses do.
You can see this effects all of us. It is time to get off your lazy boy chairs and join the Tea Party or another group and let your voice be heard.
Tackling Californias Mounting Debt
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