Out of the fifty States, fifteen are in relatively dire
financial condition. Their expenditures far outweigh their revenues. There is
one State and one Territory very close to declaring bankruptcy and defaulting
on their bonds and other commitments. Apparently, the banks and financial
institutions are being very kind to Louisiana and Puerto Rico. This will not
last long, as both are in the process of liquidating assets to pay for basic
commitments such as salaries and pension contributions. Talk about too big to
fail! How much will the U.S. Treasury be on the hook for if a State, or
Territory, actually goes bankrupt?
States
and Territories in trouble: Alabama, Arkansas, Florida, Illinois, Kansas,
Louisiana, Maine, Michigan, Mississippi, New Jersey, North Carolina, Oklahoma,
Texas, Wisconsin, Puerto Rico.
“In
trouble” indicates that their expenditures far
outweigh their revenues and there is no apparent relief in sight. In some
cases, they are selling off State owned land, car and truck fleets, and State
owned buildings; anything they can do without right now. The State of Louisiana and Bobby Jindal
put forth a 2015/16 budget that showed a revenue stream of $9 Billion and a
balancing expenditure rate of $9 Billion. As it turns out, the estimate on
revenue was manipulated, and has fallen woefully short of that $9 Billion mark.
Meanwhile, the expenditures, which are more accurately noted, have remained at
the $9 Billion level. Louisiana’s new Democratic Governor has his work cut out
for him. My guess is that something will happen at the Federal level to
remediate the situation in Louisiana, and it will be done very, very quietly in
the dead of night on a weekend.
Can you say, “BAILOUT”?
Based on the States and Territory listed above, it
doesn’t take much a mathematician to realize this Country is flirting with over
trillions of dollars in “bail-out” costs in tax-payer’s money. The defaults
will range from current annual budgetary numbers to their long-term debt
obligations from direct borrowing and Bonds. Unfortunately, our National
economy is not strong enough to withstand that kind of hit. We are still
recovering from the disaster of 2008. This situation is here now, and, more
than ever, the United States needs a President, Congress, and fifty Governors
who know how to balance a budget and turn deficits into surpluses. Oh, did I
mention, one of them is running for President this year.
Note:
out of one Territory and fourteen States, a Republican governs all but two.
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