Detroit bankruptcy just the tip of the iceberg
A Washington think tank is warning Congress that Detroit is just the first major example of financial troubles facing the nation.
The conservative Heritage Foundation says Detroit is bad, but its per capita obligations pale in comparison to the Federal Government’s. Its report says Detroit residents are on the hook for close to $27 thousand each while federal obligations amount to $218 thousand per person. That federal figure includes debt, underfunded retiree benefits, as well as Social Security and Medicare unfunded obligations.
Rachel Greszler is a co-author of the brief. She argues some state governments are also in bad shape, and could be lining up for federal bailouts.
“There are trillions of dollars in unfunded state and local pension liabilities. And, I don’t think that we can assume that there’s any way that these localities are going to be able to pay them,” Greszler said.
The Heritage Foundation wants Washington to turn down bailouts and rein in entitlement programs.
Greszler concedes the U.S. is more likely to find ways to meet its obligations than Detroit can. But the report concludes Congress cannot afford to ignore the problem.