The nation faces simultaneous “bankruptcies” at both the state and federal levels. While it is true that there are no provisions for bankruptcy of either governmental entities, the conditions for bankruptcy do exist, namely insolvency, the inability to pay obligations as they become due, at both the state and federal level.
We are well aware of the $1.42 Trillion 2009 federal deficit and the $12.3 Trillion national debt growing at over a Trillion a year. But not counted in these numbers are the unfunded liabilities for social security and medicare estimated in June of 2009 at $107 Trillion!
At the state level the estimated 2010-11 aggregate deficits of 48 states are $350 Billion, bonded debt has soared to $1.9 Trillion. But the unfunded pension and health care liabilities are estimated by Cato at some $1.4 Trillion nationwide. Cato recently analyzed state and local compensation, fully half the respective budgets, and found that they greatly exceed private compensation, are dramatically excessive in terms of pensions, healthcare, and paid leave and are greatly influenced by public employee unions!
So while Barack Hussein Obama and his “Keystone Cops” are piling on deficits in terms of Obamacare, non-stimulus, and earmarks, unemployment is at 10%, the banks would rather invest in Treasury notes than lend to small businesses, and government revenue is sinking at both the federal and state levels. On top of all this, our largest creditors, like China, are questioning our ability to repay our debts! What does Obama do? He goes to Copenhagen and with Clinton pledges $100 Billion a year to the developing nations!
I keep thinking I’m having a bad dream. How can these droids do what they are doing? If you are already wounded, why would you continue shooting yourself in the foot? California, the spend and spend poster child, will ask Obama for assistance with its $21 Billion current deficit without getting its fiscal house in order. I’m just waiting for Obama to ask California for assistance with the nation’s $1.42 Trillion current deficit without getting its fiscal house in order!
If we were to properly account for the unfunded liabilities and add proper provisions for them on a current basis, then add that to the current operating costs along with any legally obligated amortization of the term debt, neither would the combined governments be able to generate enough tax revenue to service current expenses, nor would they be able to borrow sufficient sums to cover those expenses. Simply stated, they are poor credit risks. China has stated as much!
There you have it. Technically no bankruptcy, nonetheless both the federal government and the state governments are bankrupt! Our children, grandchildren and great-grandchildren will pay the price for this immorality.