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The debt problem in the US is very bad at the federal level, with Bush and Obama more than doubling our national debt in the last ten years.
But less discussed is the massive debt owed by the individual states, and the potential political crisis that develops when one or more states (almost inevitably at this point) defaults on its debt. Illinois is in a tough spot right now, with even lottery services threatening to suspend services to the state.
Check out this public letter from the state comptroller published on her website:
https://illinoiscomptroller.gov/new...reaches-out-to-state-leadership/#.WUqMGmjyu71
"... I must communicate to you at this time the full extent of our dire fiscal straits and the potential disruptions that we face in addressing even our most critical core responsibilities going forward into the new fiscal year. My Office has very serious concerns that, in the coming weeks, the State of Illinois will no longer be able to guarantee timely and predictable payments in a number of areas that we have to date managed (albeit with extreme difficulty) despite an unpaid bill backlog in excess of $15 billion and growing rapidly.
We are effectively hemorrhaging money as the state’s spending obligations have exceeded receipts by an average of over $600 million per month over the past year.
"My cause for alarm is rooted in the increasing deficit spending combined with new and ongoing cash management demands stemming from decisions from state and federal courts, the latest being the class action lawsuit filed by advocates representing the Medicaid service population served by the state’s Managed Care Organizations (MCOs). As of June 15, the MCOs, and their provider networks, are owed a total of more than $2.8 billion in overdue bills at the Comptroller’s Office. There is no question that these obligations should be paid in a more timely manner and that the payment delays caused by the state’s financial condition negatively impact the state’s healthcare infrastructure. We are currently in court directed discussions to reach a workable and responsive payment schedule going forward, but any acceleration of the timing of those payments under the current circumstances will almost certainly affect the scheduling of other payments, regardless of other competing court orders and Illinois statutory mandates."
Recently, Moody's Investor Services, a credit fating firm, has warned that unless a budget is passed soon (Illinois has essentially functioned without a budget for the past three years) Illinois could become the first state to be downgraded to junk status. It also emphasized that the financial problems of the state are political in nature, and not due to a recession or external economic factors.
http://www.chicagotribune.com/news/...et-moodys-rauner-met-0331-20170330-story.html
If no budget is passe by July 1, we could see things really come apart by the seams.
But less discussed is the massive debt owed by the individual states, and the potential political crisis that develops when one or more states (almost inevitably at this point) defaults on its debt. Illinois is in a tough spot right now, with even lottery services threatening to suspend services to the state.
Check out this public letter from the state comptroller published on her website:
https://illinoiscomptroller.gov/new...reaches-out-to-state-leadership/#.WUqMGmjyu71
"... I must communicate to you at this time the full extent of our dire fiscal straits and the potential disruptions that we face in addressing even our most critical core responsibilities going forward into the new fiscal year. My Office has very serious concerns that, in the coming weeks, the State of Illinois will no longer be able to guarantee timely and predictable payments in a number of areas that we have to date managed (albeit with extreme difficulty) despite an unpaid bill backlog in excess of $15 billion and growing rapidly.
We are effectively hemorrhaging money as the state’s spending obligations have exceeded receipts by an average of over $600 million per month over the past year.
"My cause for alarm is rooted in the increasing deficit spending combined with new and ongoing cash management demands stemming from decisions from state and federal courts, the latest being the class action lawsuit filed by advocates representing the Medicaid service population served by the state’s Managed Care Organizations (MCOs). As of June 15, the MCOs, and their provider networks, are owed a total of more than $2.8 billion in overdue bills at the Comptroller’s Office. There is no question that these obligations should be paid in a more timely manner and that the payment delays caused by the state’s financial condition negatively impact the state’s healthcare infrastructure. We are currently in court directed discussions to reach a workable and responsive payment schedule going forward, but any acceleration of the timing of those payments under the current circumstances will almost certainly affect the scheduling of other payments, regardless of other competing court orders and Illinois statutory mandates."
Recently, Moody's Investor Services, a credit fating firm, has warned that unless a budget is passed soon (Illinois has essentially functioned without a budget for the past three years) Illinois could become the first state to be downgraded to junk status. It also emphasized that the financial problems of the state are political in nature, and not due to a recession or external economic factors.
http://www.chicagotribune.com/news/...et-moodys-rauner-met-0331-20170330-story.html
If no budget is passe by July 1, we could see things really come apart by the seams.
