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Illinois Latest Victim of Obama Recession

By Staff Writer Jonah H.

Sean talked Tuesday about Illinois, yet another state that cannot pay its bills. The state owes $5 billion right now to schools, rehabilitation centers, child care, and the state university. Illinois’s deficit is $12 billion, which is almost half the state’s budget, and its pension system is at least 50% underfunded. The major rating agencies have downgraded the state. “We are not paying bills for absolutely essential services,” says Illinois Comptroller Daniel W. Hynes. Government agencies survive from one day to the next, not knowing how they are going to receive funds.

The Democratic-controlled legislature for years skipped around the state’s balanced-budget law, spending on services it could not afford. Former governor Rod Blagojevich’s decision to float $10 billion in bonds in order to pay the state pension has cost the state billions of dollars. These bad practices have caught up to Illinois because of the Obama recession, and will make for painful days ahead.

Illinois is the latest example of a state that cannot pay its bills, and it may not be the last. California and New York have already become known for fiscal collapse. Susan K. Urahn of the Pew Center on the States noted that these states, because of their budget problems, “could be a big drag on the national economy.” Moreover, if the economy continues to struggle, or there is a double-dip recession, more states could find themselves in the same situation, as could the federal government at some point.