The nonprofit fiscal watchdog State Budget Solutions has conducted an extensive analysis of state government finances. Reuters sums up the dismal findings:
State Budget Solutions combined states’ major debt and future liabilities, primarily for pensions and employee healthcare, unemployment insurance loans, outstanding bonds and projected fiscal 2011 budget gaps. It found that in total, states are in debt for $4.2 trillion.
Let that sink in. $4.2 trillion. In debt. And that’s only the state governments whose official financial calculations “…do not offer a full picture of the states’ liabilities and can rely on budget gimmicks and accounting games to hide the extent of the deficit.” Great.
True, Reuters points out that other estimates of state liabilities are lower: The American Enterprise Institute (AEI) puts public pension shortfalls at $2.8 trillion; the Pew Center on the States pegs pension liabilities at about $700 billion. And so on.
But that is the truly frightening aspect of this whole debt crisis — no one seems to know how much is really owed. To put it in personal terms, if you knew you were in debt by $4 trillion, you’d be screwed, but at least you’d know how screwed you were. But if you owed so much money that a dozen different accountants couldn’t even agree on the amount, well, that’s a whole different kind of screwed, isn’t it?