As the United States government continues to pile up debt, most states are following in its footsteps. Total state government debt now stands at $1.49 trillion with 40 states lacking sufficient funds to pay their bills according to Truth in Accounting’s (TIA) Financial State of the States report.
At the end of the fiscal year (FY) 2018, 40 states did not have enough money to pay all of their bills. This means that to balance the budget – as is supposedly required by law in 49 states – elected officials have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers.” – Financial State of the States report
Unfunded pension liabilities are the primary factor driving the pileup of state debt. According to the report, “One of the ways states make their budgets look balanced is by shortchanging public pension and OPEB (another post-employment benefit) funds. This practice has resulted in an $824 billion shortfall in pension funds and a $664.6 billion shortfall in OPEB funds.”
TIA Founder and CEO Sheila Weinberg said for many states, there is no easy way out of their fiscal mess. “Many of these state governments have no hope of achieving a budget recovery barring significant program cuts or tax hikes,” said Weinberg. And don’t expect any states to begin cutting back. Instead, you will be expected to pay for whatever the government demands in the form of higher taxes. Enjoy your freedom.
As Schiff Gold wrote:
In simple terms, if you’re depending on a fat government pension to fund your retirement dreams, your golden years could turn into a nightmare. As we’ve reported, you should probably shouldn’t assume any government pension will ever be paid.
According to TIA, state governments use a number of accounting tricks to create the illusion of fiscal responsibility. But New Jersy, who has the biggest problem, has a debt per taxpayer of $65,100. That’s a lot of money for people to owe for things they didn’t voluntarily agree to pay for.
The TIA report highlights yet another aspect of America’s massive debt bubble that includes not only government red ink but also corporate debt and consumer debt. Extreme debt load in America today is among the underlying economic fundamentals that simply can’t be ignored, and yet consumers pile it on as corporations go bankrupt for having too much and the government continues to steal more money from people who haven’t even been born to finance their existence.
The bubble will burst at some point.
Peter Schiff is the author of Crash Proof 2.0: How to Profit From the Economic Collapse. The economic and monetary disaster which seasoned prognosticator Peter Schiff predicted is no longer hypothetical-it is here today. And nobody understands what to do in this situation better than the man who saw it coming. For more than a decade, Schiff has not only observed the economy but also helped his clients restructure their portfolios to reflect his outlook. What he sees today is a nation facing an economic storm brought on by growing federal, personal, and corporate debt; too little savings; and a declining dollar.