State Budgets: Day of Reckoning

Posted: December 20, 2010 in budget, economy, steve

It could be the biggest crisis since the collapse of the housing market. That’s how experts are describing state budgets, which are becoming so spend-heavy that municipalities are now drowning in debt and unrealistic spending obligations. Here’s a taste: California now spends more on public employee pensions than it does on the state university system; Arizona has sold its state capital, supreme court chambers, and legislative building to private investors; and Illinois, which spends twice as much as it takes in in taxes, is months behind on Medicaid payments and some gas stations won’t even take State Trooper credit cards.

The segment also features Meredith Whitney, one of the most respected women on Wall Street who once predicted the dismal housing collapse. In her mind, the state budget crisis will be just as crippling.

The Manhattan Institute’s Steve Malanga called the state budget problem a “fiscal train wreck.”

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