US states have amassed at least $1.5 trillion in unfunded liabilities in 2017, even though 49 of them have some form of balanced-budget restriction.

Bill Bergman attempts to answer this puzzle. He is director of research with Truth in Accounting, a nonprofit watchdog that publishes the annual Financial State of the States, a report that provides taxpayers with clear and transparent state-accounting information.

Bergman explains that state governments get away with spending and promising beyond their means due to accounting tricks and regulatory capture by lobbying groups. In particular, retirement obligations have grown beyond what states such as Illinois can afford to pay. What can’t happen won’t happen, and Puerto Rico-like default chaos lies ahead.

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Meet the hosts

Fergus Hodgson is the chief executive of Antigua International, a consulting firm that connects the Americas, and he is the roving editor of Gold Newsletter. Originally from New Zealand, he has been a nomad for the past eight years, and his personal blog is the Stateless Man.
Brien Lundin is president and CEO of Jefferson Financial, which publishes Gold Newsletter and hosts the New Orleans Investment Conference. He has four decades of experience in investment markets.


  • Many of us like to associate with like-minded people, but there is something to be said for associating with opposite-minded people. Know thy enemy. In this case, I was listening to a lobbyist who has written “As a Democrat, I think the government has a role to help people.”  I can’t imagine what role the criminally insane can have in helping people, and I can’t help but imagining what harm they can do. The road to hell is paved with good intentions. A telling statement made by this lobbyist was “If you’re not at the table, you’re on the menu.” I think this is a concise summary of the evil of government power, but for this lobbyist it was an invitation to get involved in lobbying government to defend your interests and promote your pet projects. Microsoft had no lobbyists and ignored the government until the company was attacked with vicious anti-trust actions by the government. Subsequently, Microsoft invested heavily in lobbyists. It seems that government is a self-perpetuating power machine that cannot fail to grow.

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