Once the State legislatures get wind of a real bailout, they will all rush to the trough and cause mass federal receivership of the states.By Sudeep Reddy
The budget woes facing U.S. states may not be as overwhelming as the troubles in Greece. But in a new paper, Northwestern University economist Joshua Rauh says at least seven states are heading toward crushing crises — of the magnitude that would require U.S. bailouts in the next decade — from one cause: state pension liabilities.
In some state constitutions, promised pension benefits to state and local government workers take a higher priority than general obligation bonds. Rauh, with the University of Chicago’s Robert Novy-Marx, previously estimated that state pension liabilities stood at $3 trillion at the end of 2008 compared to $1 trillion in other forms of debt.
Wednesday, May 19, 2010
Another bad report on State pensions
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