Von Drehle@Time: From Hartford to Honolulu, once sturdy state governments are approaching the brink of fiscal calamity, as the crash of 2008 and its persistent aftermath have led to the reckoning of 2010. Squeezed by the end of federal stimulus money on one hand and desperate local governments on the other, states are facing the third straight year of staggering budget deficits, and the necessary cuts will cost jobs, limit services and touch the lives of millions of Americans...
And don't count on the shaky economic recovery for relief. After plunging in 2009, tax receipts are stabilizing in many places — but the next big shoe is fixing to drop. Having poured billions of dollars into state coffers through the stimulus act of 2009, the federal government is poised to close the tap. President Obama made an unusual Saturday night request to Congress last week for $50 billion in emergency aid to the states to stave off layoffs of teachers, firefighters and police. But it's an election year, and there is scant appetite among vulnerable Democrats in Washington for more zeros at the end of the federal deficit. (Only the federal government is allowed to run deficits; states and cities must balance their budgets or face default.) Already, 11 states are projecting major budget gaps — greater than 10% of general-fund spending — well into 2013. Such persistent budget woes are unprecedented in the era of modern American government. You'd have to go back to the 1930s to find a parallel...
The great reckoning of 2010 took us years to create and will be years in the fixing. It's not as if the economic crisis isn't plenty painful already. In government, as in life, there are cuts that injure and cuts that heal. As they continue to slog through the wreckage of the Great Recession, state and local leaders have a challenge to be surgeons rather than hacks and make this era of crisis into a season of fresh starts.
Ross via Bolton@Bloomberg/Twitter: Looming municipal debt crisis.
Mullen & Carter via NPR: During a recent Washington speech, Mullen highlighted one troubling number: Within two years, just the annual interest on the debt will be close to $600 billion.
"And that's, notionally, about the size of the Defense Department budget. It's not sustainable," he said.
But, if overspending now endangers U.S. security, is it in part because the country is spending too much on security? At $700 billion a year, defense is the biggest part of the federal budget. The United States is now spending as much on defense as the rest of the world combined.
[The U.S. consumes 25% of the world's energy with a share of global GDP at 22% and a share of the world population at 5%.]
If the deficit is to be reduced, the Pentagon is certain to take a hit, and Defense Secretary Robert Gates is warning the department to get ready.
"The secretary is saying we need to deliver the war-fighting capability required within the resources the country can afford to provide, and that's going to require us to change the way we do business here," says Ashton Carter, the Defense Department's undersecretary for acquisitions.
Fast-forward: January 2011:
