Earlier this summer financial analyst Meredith Whitney released a new warning on the financial state of the states saying, the fiscal mess is far worse than official estimates. The only way to avoid massive municipal defaults she concludes is by raising taxes and cutting social services. Whitney first predicted hundreds of billions in defaults in a 2010 60 Minutes interview. They've yet to happen and many analysts doubt they ever will.
Jeffrey Miron economics professor at Harvard university and a senior fellow at the Cato Institute isn't so doubtful. He's out with a report of his own that states, "state government finances are not on a stable path; if spending patterns continue to follow those of recent decades, the ratio of state debt to output will increase without bound." Driving those costs he says are health care costs.
"Things are bad for basically all the states for almost identical reasons," Miron says in the accompanying interviewRead More »from Jeffrey Miron: States Are Underestimating Budget Crisis By Trillions