By The Numbers: Who Goes Bankrupt First, lllinois or California?

We occasionally do a post under the theme “by the numbers” where we take real world numbers to show how delusional and ignorant the American politician can be in the face of numbers that tell a different story that he or she is telling. To see previous posts under this theme, just enter “by the numbers” in the search box above.

1) A few posts ago we made the case that Illinois would be the first state government to go into bankruptcy. But according to a recent article on the Epoch Times website, California may still be able to sneak past Illinois and become the first state government to go bankrupt:

• While the governor of the state is hyping the estimate that this year’s California state government budget will have a revenue surplus of $20.6 billion, the state still has only $100.1 billion in assets to cover a whopping $369.9 billion in bills and unfunded liabilities.
• According to the Truth In Accounting organization, these future bills include $102 billion of unfunded pension benefit liabilities and more than $107 billion in unfunded retiree healthcare for former state government workers.
• With about 30 million adults living in the state, every one of those state residents would have to write a check for almost $7,000 to cover just these two buckets of future bills, assuming the buckets do not get any larger, which is highly unlikely.
• This $7,000 is on top of some of the highest tax rates in the country.
• Despite claiming that the state government has a budget surplus of over $20 billion, Shelia A. Weinberg, founder and CEO of the Truth in Accounting organization says not so fast, saying that the state needs, ”$270 billion to pay its bills, including unfunded pensions and retiree health care promises.”
• In total, “Unless pension and retirees’ health care benefits are renegotiated, each taxpayer will be burdened with paying $22,000 in taxes in the future without receiving any services or benefits.”
• And finally, according to Ms. Weinberg: “the state is drowning in debt.” 
• The CalPERS organization, which is responsible for funding state government workers’ pensions, has about $365 billion in assets, which leaves it $139 billion short of meeting its future fiscal obligations, this according to the Wall Street Journal.
• As you can see, if there actually is a $20 billion surplus in the state government’s financials, it is a mere pittance needed to cover the future bills and unfunded state government liabilities and promises.
• Or as Ms. Weinberg would say: “Touting a surplus is similar to me claiming I have a surplus because I think I will earn more than I spend next year, but not mentioning I have huge amounts of credit card debt.”
• Despite these outrageously bad financial conditions the state government recently decided to pay $98,000,000 a year to provide free medical care to 90,000 illegal immigrants.

Given how highly taxed Californians are already taxed, driving more and more taxpayers out of the state, raising taxes even more would drive more people out of the state and probably reduce, rather than increase tax revenue, and thus, the fiscal death spiral starts. 

2) But California is not alone in having a lot of unfunded future pension liabilities:

• Across the country, only about 72.5% of all pension liabilities are funded and covered.
• Back in the year 2000, on average pensions were funded properly at about 100% in total.
• And this continued shortfall in funding future pension liabilities in the past ten years has been in the midst of a long economic growth period, imagine what happens when the next recession hits.

3) Back to Illinois for a minute, numbers from a March 25, 2019 Wall Street Journal article shows how bad off the state’s financials are:

• The state faces a $3.2 billion tax revenue shortfall in the next fiscal year.
• In addition, it has about $8 billion in unpaid bills on its books.
• Depending on how you measure unfunded pensions liabilities, the shortfall estimate ranges from $133 billion to $250 billion.
• If the shortfall is as high as $250 billion, then every one of the state’s 12.7 million residents would have to write a check for about $19,700 to cover the shortfall, thus, a family of four would have to write a check for almost $80,000.
• The state has seen its population decrease 157,000 people since just 2013, despite other states around Illinois having seen population growth, as residents and businesses leave to find less onerous taxation and business regulations.
• Since the third largest city in Illinois, Rockford has a little less than 150,000 residents, the 157,000 people who left the state since 2013 would represent the entire third largest city in the state moving out and taking a few residents from neighboring towns with it.
• Moody’s Bond rating service has the state rated on notch above junk bond status, which will make it more and more difficult for the state to raise money via bond sales.
• According to Adam Schuster of the Illinois Policy Institute: “As a state we are someone who is limping from paycheck to paycheck and relying on high interest payday loans.”

Yes, Illinois is still in the lead when it comes to which state will go bankrupt first, the numbers are pathetic and getting worse. And higher taxes is NOT going to fix the problem.

4) Back to California for a moment and another aspect of their poor numbers:

• The homeless population in the county of los Angeles has jumped 12% in just the past year while the homeless population inside the LA city limits has jumped 16% in just the past year.
• The county now has the highest outdoor homeless population in the country, 58,936.
• The homeless population in San Francisco jumped 17% in the past year.
• At just under 130,000 homeless Americans, the state has the highest homeless population in the country.
• The city government and county government will spend over $1 billion this fiscal year to try and get a handle on the homeless problem with the county increasing its homeless budget by 15% in the next fiscal year.

Look, I am sensitive to someone who is homeless. In California especially it is probably not their fault as politicians have implemented idiotic and restrictive housing policies that have minimized the amount of affordable housing in the state.

But maybe the southern California politicians need to take a fresh look at the problem which keeps getting larger and larger despite tax rates and homeless budgets that keep getting larger and larger without a solution. Higher and higher taxes that do not resolve a growing problem, the numbers do not lie.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

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It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

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Dissed By The Debt Ceiling Fiasco

Just when you thought the American political class could not stoop any lower or act any more in incompetently, along comes the debt ceiling crisis and we are all amazed that again, the political class has failed to exceed any standards of quality performance. And, as always, its the citizens of this country and the nation itself that gets dissed and abused. Getting "dissed" is certainly the right word when you consider the following apt adjectives to describe this fiasco:

Disallusioning - The characters in the White House and Congress out did themselves when it came to embarrassing themselves and the nation in the eyes of the world. The whole process was so disillusioning when viewed from a problem solving process since there was no process. There was no plan, there was no analysis, there was just a chaotic lurching towards the eventual deal.

How can you think you can competently run a country with over 300 million people, a massive government bureaucracy, and an economy worth over $14 TRILLION when you cannot even maturely and intelligently address a singular budget issue? So disillusioning.

Disgusting - There are many people in this country that honestly and intelligently believe that the national debt crisis is one of the few issues in our country's history that has a credible chance of destroying our nation, our democracy, and our future. Many of them made their concerns known by voting for and electing dozens and dozens of people to the House Of Representatives last November to represent their heartfelt fears and concerns. This is their right and duty as American citizens living in a democratic nation.

And how were their elected House Representatives treated when the debt ceiling debate was raging? Senate Majority Leader Harry Reid publicly called those who opposed a meager early version of the debt ceiling deal "extremists." House Minority Leader Nancy Pelosi publicly told John Boehner to act like an adult after a meeting at the White House. In a Democratic party meeting, Congressman Mike Doyle accused those in favor of getting out-of-control government spend under control "terrorists: "We have negotiated with terrorists. This small group of terrorists have made it impossible to spend any money." Isn't that what one should do if one was spending way too much? Pretty simple concept, Congressman Doyle.

These attitudes are disgusting and despicable on any number of levels. While Reid, Pelosi, people like Doyle, and Obama have been in charge of the White House and Congress, they have incurred over $5 TRILLION worth of national debt and we have nothing to show for it. $5 TRILLION is extremist by any measure of spending, whether it is total spending or out-of-control spending as a percentage of the nation's GDP. I contend their extreme damage to our national debt and economy, under their watch, make these people the real extremists and certainly not adults. Adults would have done a much better budget management job than the job Pelosi and Reid did.

And the worst name calling was by Doyle. To associate House members, who are representing their constituents to the best of their ability, with terrorists that murder, torture, and terrorize innocent people is the lowest of low when it comes to political rhetoric. It has absolutely no place in any kind of adult political discussion. It contributes nothing to a viable solution to any of our problems and certainly did not contribute anything positive to this meager debt ceiling deal. Disgusting.

[Side notes to the "terrorist" statement. Numerous news reports, quoting several sources (i.e. more than one source) who were actually in that meeting, concur that Vice President Joe Biden also contributed ot the "terrorist" language,  reportedly stating that these House Of Representative members  "have acted like terrorists." Several days after the reports, Biden's office denied that he mentioned anything like these words, despite the observation of several at the meeting. For the first time in his tenure in the White House, Obama spoke out and chided those that carelessly toss around words like "terrorists." Doyle does not deny he stated the characterization. Thus, there are conflicting stories of whether or not the Vice President stooped as low as Doyle.]

Dismal - Despite the teeth gnashing, the embarrassment of the country in the worlds' eyes, the inability to execute a credible problem solving process, and the degeneration of the Democratic Party leaders into kindergarten level name callers, the end product of the fiasco is not much better than dismal. The agreement calls for the Federal government to reduce out-of-control spending by about $2.5 TRILLION over the next ten years.

However, let's do a little math:

• The current Federal government national debt level is about $14.3 TRILLION.
• Obama's long range budget, that he submitted in the spring, called for the Federal government to add an additional $9 TRILLION to the national debt level.
• Thus, without changes to the Obama's long term budget plan, the national debt is estimated to grow to over $23 TRILLION in the next ten years, the equivalent of over $200,000 per U.S. household.
• This meager debt ceiling agreement would theoretically reduce the country's national debt to $20.5 TRILLION or about $178,000 per household.

Obviously, either number, with or without this settlement, is a dismal disaster for America and for America's families. The country will not be able to handle such massive debt no matter how much Obama wants to tax the rich and close tax loopholes. The numbers, even with this agreement, are still overwhelming despite any "solutions" the White House has proposed. Dismal.

Disappointing - Despite all of the ugliness that was incurred during the past few weeks, it probably will not make any difference when it comes to the dreaded downgrading of America's debt rating by the major credit agencies:

1) Last week in a Bloomberg News report, Standard and Poor's (S&P) chairman, John Chambers, issued a video that stated how much the political class needed to reduce government spending: "$4 TRILLION wold be a good down payment. A grand bargain of that nature would signal the seriousness of policy makers to address the fiscal situation in the U.S." In other words, the $2.5 TRILLION that was agreed to is not even a good down payment on debt reduction in the eyes of a major credit ratings agency.

S&P has given a top rated AAA ranking to U.S. government debt since 1941, through world wars, smaller wars, recessions, and various political antics in the White House and Congress. But the current set of politicians may be able to do what all other politicians before them could not do: get U.S. debt downgraded.

Chambers went on to say that "The $4 TRILLION, depending on whether it's front loaded or back loaded, is not going to do the trick in terms of stabilizing the U.S. government debt to GDP ratio. But it takes you pretty far along."

2) One of the most respected investors in the country, Pimco Co-Chairman Bill Gross, has publicly stated that the deal will not eliminate the danger of a credit ratings downgrade: "Eventually there's a downgrade coming, it just depends on Moody's, S&P, and Fitch and they're very slow moving."

Gross went on to state the obvious: the total, unfunded liabilities of the United States, Social Security, Medicare, and Medicaid, puts the country among the most debt-laden countries int he world. He feels that the debt load and crisis has had negative impacts on the country's economic growth, interest rates, and financial markets.

3) Bill Nuti, who is the CEO of NCR, warns that: "a downgrade to the U.S. credit rating will have widespread deleterious effects. Our economy will transition from a slow growth scenario to a no growth scenario and we could likely find ourselves in a double dip recession."

4) One would have thought that once the debt ceiling agreement was signed and some uncertainty from the world removed that the stock market would respond favorably. However, that is not what happened:

• The day after the agreement was signed, the Dow Jones Industrial Average was down well over 200 points, down 2.2%. The Dow is down 6.7% in just the past eight days.
• Every one of the companies in the Dow Industrials average was down the day after the signing.
• The S&P 500 dropped 2.6% after the signing while the NASDAQ was down 2.7% in one day. The Russell 2000 index of small businesses was down 3.3%.

4) The price of an ounce of gold went up 1.4% to $1645 an ounce on news that the agreement had been signed while domestic stock prices dropped substantially.

Thus, the people that depend on knowing and understanding the econcomy and financial markets have shown their disdain for the agreement by fleeing the domestic stock market for other, safer investment options. Disappointing.

Disillusioning, disgusting, disappointing, and dismal, no mater how you cut it, we have been dissed by the debt ceiling situation, the debt ceiling childish name calling, and the final debt ceiling agreement. While this agreement has slowed down the row boat as it heads for the waterfalls, it has not stopped the forward progress towards those fatal falls.

Much work still has to be done and if the childish, immature, cowardly, and shallow behavior and analysis of the political class that was exhibited during the past few weeks is any indication of future behavior, we are still in critical condition. As a result, tomorrow we will take a look at a detailed way to reduce government spending, not by a meager $2.5 TRILLION, but by three or four times that much without fear mongering like Obama has done over the past month. I believe that the Federal government can get its financial house in order without starving the poor, bankrupting the needy, and leaving the country defenseless.

No more dissing, let's start respecting and problem solving before  a much larger financial and economic fiasco envelopes the whole country. That would be the ultimate DIS.



Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at http://www.loathemygovernment.com/. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.loathemygovernment.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/