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Illinois Budget Debacle Proves Politicians Can’t Fix the Problems They Create

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The US faces a massive debt problem. We all know it. But politicians and government officials are either unwilling or incapable of doing anything about it.

David Stockman mentioned the burden of debt in a recent interview with Neil Cavuto on Fox Business:

We have $63 trillion of total debt in this economy. The public sector – county, state, and local – is nearly $25 trillion. And we’re getting old. The Baby Boomers are retiring, 10,000 a day. In another 5 or 10 years we’re going to have a massive increase in the retired population. How do you fund all that? Who’s going to pay the taxes?”

Despite the glaring magnitude of the problem, government officials seem content to keep their heads buried in the sand and ignore it until it’s too late. Even when they acknowledge it, they seem utterly incapable of effectively dealing with the issue.

Illinois_State_Capitol,_2012

Illinois offers a prime example. The Prairie State has the lowest credit rating of any state in the US, and it hasn’t had an operational budget for almost a year. The situation passed the level of a “crisis” months ago. Still, with the end of this year’s legislative session looming, the state doesn’t appear close to getting a budget in place. The Wall Street Journal recently reported on the Illinois budget debacle:

Republican Gov. Bruce Rauner said he would veto a budget passed by the Democratic-controlled House if it reaches his desk, pushing the state of Illinois closer toward a second year without a budget even as it faces $7 billion in unpaid bills. The veto threat Sunday came as lawmakers at the Capitol in Springfield scrambled to find common ground ahead of the end of the spring legislative session Tuesday.”

Gov. Rauner seems to recognize the urgency of getting a balanced budget in place:

We have been passing unbalanced budgets in Illinois for years and years and years. It’s created a crisis that we are dealing with today. And it is essential that we get an economy that is more competitive to grow more jobs.”

And yet for 11 months, politicos in the state haven’t been able to get it done. The plan passed by the Illinois legislature didn’t even include the billions needed to cover pension and debt payments.

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The problems in Illinois are emblematic of the issues state and local governments face across the country. Politicians keep kicking the can down the road, but eventually they run out of road. We’re seeing a similar disaster play out in Puerto Rico. Peter Schiff pointed out on CNBC that the US federal government is actually in worse shape than the territory it is trying to “save.”

Puerto Rico is broke. We all know that. But it was broke two years ago. It was broke three years ago. Why didn’t anybody care? The creditors kept lending them money even though they were broke. Well, eventually people wake up and they realize the debtor is broke. America is more bankrupt than Puerto Rico.”

And yet all we hear are a lot of empty promises and the sound of that can rattling down the street.

The lesson: we can’t depend on politicians to fix the problems they create. Ultimately, the whole mess will just collapses in a heap, leaving us all to pick up the pieces.

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