Bankrupt Cities And States Get The National Disaster They’ve Been Hoping For
The people running states like New Jersey and cities like Chicago know they’re broke. Ridiculously generous public employee pensions – concocted by elected officials and union leaders who had to have understood that they were writing checks their taxpayers couldn’t cover – are bleeding them dry, with no political solution in sight.
They also know that they have only two possible outs: bankruptcy, or some form of federal bailout. Since the former means a disgraceful end to local political careers while the latter requires some kind of massive crisis to push Washington into a place where a multi-trillion dollar state/city bailout is the least bad option, it’s safe to assume that mayors and governors – along with public sector union leaders – have been hoping for such a crisis to save their bacon.
And this year they got their wish. The country is on lockdown, unemployment is skyrocketing and mayors and governors now have a plausible way to rebrand their criminal mismanagement as a “natural disaster” deserving of outside help.
Here, for instance, is an estimate of how high unemployment will spike for various states. Note that overall it’s brutal, but the distribution isn’t what you might expect:
And here’s a table of state rainy day funds (i.e., cash on hand). To their credit, oil-producing states had the discipline to save against that commodity’s inevitable price fluctuations. Other states apparently didn’t see the need:
Illinois, which has the most underfunded pensions but, interestingly, a relatively healthy labor market, apparently had its natural disaster bailout plan prepped and printed before COVID-19 was invented and released. Because governor Gov. J.B. Pritzker almost instantly had his hand out for – get this – $41 billion, a sum equal to three times the state’s estimated pandemic-related revenue loss in the coming year. Overall, governors have asked for about $500 billion in aid.
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