Business Insider checks in with Prof. Joshua Ruah, Exchequer’s favorite source for data on state-government pension shenanigans, and draws up a list of which states are going down in what order. My only beef with this analysis is that I think it relies on assumptions about investment returns that are slightly over-rosy, meaning that the pensions funds are liable to go toes-up sooner than projected.
No. 1 on the list is perennial fiscal offender and Obama career incubator Illinois, followed by Connecticut (no surprise), Indiana (uh, governor?), New Jersey (uh, governor?), Hawaii, Louisiana (uh, governor?), Oklahoma, Colorado, Kansas, Kentucky, and New Hampshire.
I count three states with Republican governors who are positioned to be national bigwigs and possible presidential contenders. The legislatures, of course, are the real problem, but state bankruptcy can be a real career-ender for a governor.
I like Hawaii’s odds: Surely there is some way to leverage the unquenchable interest in Barack Obama’s birth certificate and make some money. You know, a kook tax. As for the rest of these states — it looks grim. They cannot tax their way into solvency (the expenses are simply too heavy), they cannot borrow, and many of them, including Illinois, are constitutionally forbidden to reduce pension payments.
I think the odds are slightly better than even that we’re looking at a $1 trillion plus federal bailout of the state pension systems.