In recent months, debate has heated up over whether the federal government should double down on assistance for state and local governments. The pandemic and associated lockdowns have adversely impacted tax revenue, amidst accelerating challenges in some states facing the consequences of decades of financial mismanagement.
That’s an important debate, but should we simply question whether and how the federal government could actually do this?
If you thought Illinois, New Jersey and other challenged states had pension problems, you might want to take a look at Uncle Sam.
The chart below shows the federal government’s debt for “employee and veteran benefits payable.” From 2008 to 2019, that debt rose 60 percent, climbing from $5.3 to $8.4 TRILLION.
Expressed on a per-income tax filer basis, Uncle Sam is in even worse shape than Illinois.
Granted, Uncle Sam has one thing Illinois doesn’t have -- the power to print money to pay off its debts. That may be good for Uncle Sam, but whether that is good for America is another matter.