The Hill News

President Obama recently gave his State of the Union address. The President is about to take on a number of urgent economic issues, but most important among them may be the financial crisis that would ensue if one or more of the 50 states went broke, which many of them may be perilously close to doing.

Consider recent developments: California Governor Jerry Brown declared a state of fiscal emergency and South Dakota Governor Dennis Daugaard has warned that  “[s]ome of our sister states . . . face the real possibility of bankruptcy.” Collectively, the states have more than $1 trillion of underfunded pension plans, $24 billion of budget deficits and billions of dollars of unpaid bills to public schools and universities, hospitals and social welfare programs. In short, each day brings our nation closer to a nightmare scenario in which a state with insufficient funds to meet its obligations seeks a federal bailout. 

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