Showing posts with label unfunded liabilities. Show all posts
Showing posts with label unfunded liabilities. Show all posts

Friday, August 1, 2025

The Race To Bankruptcy Court: Which State Government Gets There First?

 Many times we have discussed our theory that a major city or an entire state government will soon go bankrupt. The city and state politicians running these government entities continually raise taxes on  businesses and residents, waste that wealth on stupid programs that never succeed, and usually end up reducing the quality of life while increasing the burden on productive people in their areas. 

As a result, residents and businesses move to other cities and states, taking their tax dollars with them. This reduces the tax revenue flow to the government they are leaving, which causes the city and state politicians to raise taxes and cut services to cope with the smaller tax base. They then increase taxes and lower the quality of life which then drives more residents out to other areas, which further reduces the tax base and the financial death spiral is underway.

The major cities we think are leading candidates for bankruptcy include:

  • New York City

  • Los Angeles

  • San Francisco

  • Chicago


State governments we think are leading candidates for bankruptcy include:


  • New York

  • New Jersey

  • Illinois

  • California

  • Massachusetts


All  of these cities and states are losing their tax base as residents and businesses move  out and the latest data prove that their financial death  spirals are still going on:


  • A new database process, Vote With Your Feet, developed by Unleash Prosperity recently announced their latest analysis.

  • Their analysis looked at IRS data from 2012 to 2022.

  • The analysis tracked population  movement and what they called aggregated gross income (AGI) of households as they moved around the country.

  • And the results are quite consistent with our theory that some state is going to go bankrupt pretty soon. 

  • For example, New York state lost a whopping $111 billion worth of AGI  from former New York residents that left the state for greener pastures.

  • California did not do  much better, losing over $102 billion in  that decade.

  • Illinois lost $63 billion of AGI, New Jersey lost $31 billion, and Massachusetts lost $19 billion.

  • These are funds that are no longer being spent in these states to build the tax base, the economy and quality of life.

  • And these states not only lost AGI but also big chunks of their population.

  • New York lost 1.8 million residents and California lost 1.6 residents.

  • Conversely, states that have lower taxes, lower business regulations burden, better government services, and  lower crime rates did quite well from AGI and population gains.

  • Florida added $196 billion in AGI in the decade along with 1.6 million new inbound residents.

  • Texas gained $54 billion in AGI, Arizona gained $30 billion, North Carolina gained $28 billion, and South Carolina gained $28 billion.

  • Both North Carolina and Arizona gained about half a million residents from elsewhere during the analysis period.


So our theory of bankruptcy continues to look viable. These states are so-called sanctuary states so that status is probably accelerating the out migration from these states as taxpayer residents and businesses watch their hard earned tax dollars being spent to provide free food, free shelter, free medical free cell phones, etc. to millions and  millions of illegal  immigrants living in their states.


The states listed above also generally have the  highest level of unfunded future liabilities on their books, i.e. they have future financial  commitments that cannot be covered by the current level of taxation. An example would be underfunded pension and retirement liabilities for state government employee programs. This means at some point in time, taxes will have to be raised on current residents and businesses or benefits cut for state government retirees, two nasty decisions. That will have to be  made and which will drive even more AGI out of those states.


California recently cut back the amount of taxpayer wealth it directs to providing free healthcare for  illegal immigrants as their budget needs get worse. Massachusetts recently announced that it will spend almost a billion dollars this year to take care of illegal immigrants while the needs of Massachusetts taxpayers and residents get short shrift. By just about every possible measurement, Illinois government pensions systems are the worst funded pensions in the country.


It is an exciting time to be alive: which state government or city government will soon be financially crushed by political mismanagement of its taxpayers’ dollars and  win the race to the bankruptcy courthouse steps? Keep tuned in!


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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:


https://www.change.org/p/deseat-congress-reset-freedom



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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:

Wednesday, March 12, 2025

By The Numbers - The Fiscal Cliff That Is The National Debt and Why No Other Issue Matters

We have often warned that the skyrocketing Federal government national  debt is eventually going to crash our economy, our financial stability, and our democracy if the situation is not gotten under control and under control  quickly. Today’s post is going to review the statistics and dangers of the national debt and why the Washington politicians have to take some serious budget actions and reductions soon or the whole house of cards of our financial system and economic stability is going to go over the fiscal cliff.


Some Federal budget statistics in no particular order that should scare the hell out of you:


  • If you had spent $1,000,000 a day from the day that Christ was born, you still would not have spent a trillion dollars.

  • Spending a million dollars a day over the past two centuries or so would take you to about $750 billion.

  • The Federal government national debt is currently about $36 trillion.

  • Thus, the current national  debt is about 50 times larger than the amount of money you would have spent if you had spent $1,00,000 a day since Chrisst was born.

  • There are about 154,000,000 Federal tax returns filed every year.

  • Thus, on average each of those taxpayers would have to pay about $234,000 each to pay off the national debt.

  • Given there are about 340 million Americans living in the country today, each man,  woman and child would have to pay out about $106,000 each to pay off the national  debt.

  • A family of four then would have to pony up about $424,000 to pay off the  national  debt.

  • If you think that “taxing the rich”  more would pay off the debt you are absurdly wrong.

  • According to Forbes magazine, as of late 2024, Elon Musk was the richest American with an  estimated wealth of $244 billion.

  • Even if you taxed his wealth at 100%, his $244 billion would pay off less than .7% of the national debt, not 7%, .7%.

  • If you only took 10% of his wealth you would pay off only .07%.

  • If you taxed the wealth of the ten wealthiest people in the country at 100% and applied it against the national debt you would pay off only about 4.3% of the debt.

  • If you only took 10% of their wealth, you would pay off only .43% of the national debt.

  • And finally, according to Forbes, the total wealth of the 400 wealthiest Americans comes out to about $5.4 trillion, which if you confiscated all of it and applied it to the  national debt, you would pay off less than 15% of the debt.

  • Thus, taxing the rich more makes no sense since even if you took ALL of their wealth and applied it to paying down the debt, you would only pay off a very small portion of the $36 trillion on the books.

  • Oh, and by the way, this $36 trillion doesn't include the over $80 trillion (source: Congressional  Budget Office) in unfunded government liabilities for  Social Security and Medicare’s budgets that are going to be needed over the next 75 years.

  • To  meet those unfunded liabilities, the Federal government would need to collect, on  average, an additional $1.07 trillion a year for 75 years to keep Social Security and  Medicare solvent under the current assumptions and parameters of the programs.

  • But in 2024 the Federal government only collected $4.92 trillion in tax revenue which means to cover the additional $1.07 trillion a year it would have to raise taxes by about 22%.

  • However, of that $4.92  trillion collected, about $1.107 trillion of that was spent on defense and $1.124 trillion was spent SOLELY to pay the interest on the  national debt (Source: Wall Street Journal  article, February 22, 2025.)

  • Thus, about 45% of the Federal  government’s revenue stream was spent on only two budget lines, interest payments on the debt and defense before any other government expense was considered..

  • In theory, if the Washington political class had been operating on a balanced budget over time, then there would not be $1.124 trillion being paid out of taxpayer taxes every year to service the national  debt which means that on average, every one of the 154 million taxpayers would have an additional $7,300 in their bank accounts every year, $7,300 that wasn't going to fund interest payments on the ever escalating national debt..

  • But the Biden administration spent $6.75 trillion in fiscal 2024, adding a whopping $1.83 trillion to the national debt.

  • Thus, in fiscal 2024 the Federal  government under Biden  collected more in taxes than any government entity in the history of mankind and still  overspent it by 37%, indicating he and the rest of Congress never had an intention of getting  Federal spending under control.

  • Given the over spending by $1.83 trillion and about 154 million taxpayers, on average each taxpayer would have saved about $11,800 in taxes if Washignton had just spent what it had collected in taxes.

  • Since the national debt in 2024 was about $36 trillion and the GDP  of the entire country was about $29 trillion (GDP - value of all  goods and services produced in the  economy in a year), even if every dollar of the GDP was used to pay down the national debt we would still be looking at $7 trillion of debt.

  • With the exception of the covid years, the debt to GDP ratio has never been higher, 1.24% in fiscal  2024.

  • Going back to the Wall Street Journal article cited above, written by Niall Ferguson, he analyzed the historical relationship between defense spending and national debt/interest payments and concludes that once defense spending falls below debt servicing costs, like it did for the first time for this country in 2024, the decline of all great historic powers begins.


In the face of these  dire statistics and situation, Washington folks have been busy spending billions and billions of dollars on the following nonsense:


  • $20 billion for a Sesame Street play in IRAQ.

  • $4.5 million to “combat misinformation is Kazakhstan”

  • $3.9 million for “LGBT  causes in the western BALKANS

  • $6.0 million for tourism in EGYPT

  • $2 million to fund sex change operations in GUATEMALA 

  • Billions more for similarly inane and corrupt projects


If you are upset because Trump and Musk are shutting down government functions like these listed here but are ignoring the real threat to this country, the national debt and out of control Federal government spending, then you and I have different priorities. And while I respect your right to have a different view and different priorities, I am going to continue to construct my parachute because when the Federal government and the country shortly and  likely go over that fiscal cliff, I want to be ready and not go splat on the fiscal cliff canyon floor.


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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:


https://www.change.org/p/deseat-congress-reset-freedom



**********************


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: