California faces more than $370 billion in unfunded pension liabilities and continues to live under the perennial risk of bankruptcy. The Golden State first laid the groundwork for a bailout in 2009, during the peak of the financial crisis.
At the time, a spokesman for California State Treasurer Bill Lockyer rationalized the call for federal relief as this: "We think California taxpayers stack up pretty well compared with Wall Street firms." Since this plea, California has enacted cosmetic reforms but failed to enact changes that would turn around its troubled finances — leaving the door wide open for federal relief.
Obama's home state of Illinois is in even worse shape. It has on hand less than 30% of the money needed to fund its pension obligations. Many experts say Illinois' funds already are insolvent.
Since 2009, Illinois Gov. Pat Quinn has floated the idea of federal pension relief both at the White House and in his 2012 budget proposal. Illinois has yet to enact or even consider any major reforms, and the governor has refused to rule out accepting a federal bailout for pensions.
The rest of Mr. Dabrowski's column is HERE.