His point has been to make sure that those in Louisiana and throughout the U.S. know that there is the “Washington Way” and the “Louisiana Way” and the former will bankrupt our nation, our families and our futures while the latter lives within its means.
In fact, today, Jindal sent out a campaign letter to the public, in part saying “This week House Republicans in Washington, DC passed a bill requiring spending cuts, spending caps, and a balanced budget. It shouldn't be that big a deal; it should be what we expect. But undeterred as usual, liberal Democrats in Washington are tripping over themselves to call it unrealistic and a gimmick.
What? It's not realistic to cut government spending and balance our budget?
You know what's not realistic? I'll tell you.
It's not realistic to live in a fantasy world where the bill will never come. It's like saying, "I can't be broke - I still have checks!"
Many Americans following the U.S. debt debate in our nation’s capital would join in the finger-pointing at our country’s leaders. The United States has a 14.3 trillion dollar debt. However, according to Sheila Weinberg of the Illinois-based not-for-profit organization, Institute for the Truth in Accounting, the true debt is 75 trillion once the publically held debt, plus the liabilities for veteran’s retirement benefits, the liabilities for federal employee retirement benefits, and the liabilities associated with social security and Medicare benefits are accounted.
Also, while Jindal is quick to blame our Washington leaders for their out-of-control-borrowing and spending, Jindal rarely discusses the state’s debt. If one accepts the Institute’s numbers, in fiscal 2009 (the last report available) Louisiana was 43rd in the nation in the totality of its debt (see chart).
As of that year, Louisiana had an approximate debt of 21 billion dollars, which means each family in the state would be obligated $16,800.
The state that is at the bottom of the chart is Connecticut, owing over 53 billion dollars amounting to a whopping $41,200 obligation per family. And for those who believe that debt is a natural way of life for states, think again. Four states, Utah, Nebraska, North Dakota and Wyoming actually have a surplus rather than a debt. Wyoming has over 3 billion dollars in its bank (gasp) compared to hundreds of thousands, millions and billions owed by most of the other states.
While Governor Jindal has been claiming that Louisiana is faring better than most states in unemployment, and while he has achieved some major economic development wins lately, Louisiana ranks dead last among states in the Deep South, followed by Mississippi (ranked 37) and Alabama (ranked 34).
How did Louisiana find itself so deep in the fiscal Red Sea?
By doing what most states and indeed the federal government has been doing—charging on those credit cards.
In an interview with Weinberg, Louisiana is not alone in the way it has been fudging the numbers.
“These again are bills that prior governors and legislators have incurred and did not pay, so therefore they’ve been pushed onto future taxpayers. The future taxpayers have been burdened with prior costs that should have been included in those budgets but were not."
Which means, when Governors and legislators claim they have balanced the budgets, they have left out little items such as the states’ debts.
“Even if you looked at the state’s financial statements, you, on their balance sheet you wouldn’t even find it. These amounts are hidden off balance sheet, um and it wasn’t even until 2008 that the state was required to calculate it’s unfunded uh retiree healthcare benefit liability” Weinberg said in the interview.
According to Weinberg, Louisiana was not alone in this practice.
Weinberg said that Louisiana finally got it right:
“WEINBERG: So, in 2000 and, let me see, I’m not sure, the first number, In 2008 um your state finally calculated, again these are the employees have worked, a part of their compensation package has been that we’re going to pay your retiree healthcare benefits, so therefore that’s a prior cost of compensation, um and those had not been included in prior budgets to the tune of 9.3 billion dollars, that was finally calculated in 2008.
BAYOUBUZZ: So, in tune of the fiscal year of 2009, this is the first year that this information has been provided? Is that correct?
WEINBERG: Um let me see, fiscal year 2008 was the first year it was provided.
BAYOUBUZZ: um okay, okay.
WEINBERG: Um, and I do not have the detail, but um, your plans may have been adjusted, which would be kudos to your legislature, because in 2008 that retiree healthcare benefit liability was 9.3 billion dollars and in 2009 it was only 7.5. So, I assume there were some adjustments made to those plans.
Weinberg said the entire masquerade that has caused the states’ massive debt is the lack of “truthful numbers” in its accounting, a practice which Louisiana has only recently moved away from .
“BAYOUBUZZ: So you’re saying, like Louisiana is not using truthful numbers?
WEINBERG: Right, they do not include the true compensation in their budgets. In your state, this appears to be as far as the pension, something that in prior years, they did not use the truthful numbers, in 2008 and 2009 they did in the budget use truthful numbers in their budget calculations. So they did go ahead and fund the pension plans adequately now but the problem is that your catching up from prior years, and it’s going to take, according to the current plan they are using, it’s going to take them 40 years to catch up for prior legislatures not funding these plans, and not using truthful numbers.
BAYOUBUZZ: Are you saying that Louisiana was compelled, and the other states were compelled, or they just chose to use the truthful numbers?
WEINBERG: Louisiana, I do not know the law, I know there is a law in Wisconsin, and I know that there is a law in say Maine that, is it Maine, yeah I think it’s Maine that they need to use the truthful numbers, I’m noticing here in Louisiana that they’re that the numbers they’re using for pension expense and retiree healthcare expense are the truthful numbers, where some states are not using those numbers.
BAYOUBUZZ: And your saying that there are other numbers that Louisiana is using that is not truthful?
WEINBERG: What I’m saying is that in prior years, and again remember it wasn’t even until 2008 that the state even calculated their retiree healthcare benefits, so they were not including those amounts in their budgets until 2008, the amount that was accumulating. After that time, they have been including the costs, but your still trying to catch up with, you know the reason that you have a large unfunded liability that is off balance is that your still trying to catch up to a 7.5 billion dollars of prior retirement healthcare benefits that have accumulated that were not included in prior budgets, and the 2008 and 2009 your slowly trying to amortize those, the prior costs, to catch up. So it’s kind of like a credit card, where previously you’ve charged things, you didn’t pay attention to it, now your sort of going I need to go on a payment plan. The state has gone onto a payment plan of 30 years, over the next 30 years, we’re going to fund those, and the state of Louisiana legislatures to their credit did fund those in 2008 and 2009. So, they’ve paid a minimum balance of the prior unfunded amount, plus they have paid how much the current employees are earning. So, we have to give them kudos for that, they just got in trouble in prior years, but we can’t blame the current governor and legislatures.
Putting these figures into perspective, the 16,800 that each family in Louisiana owes is virtually “chump change” compared to the $600,000 debt each family is drowning in as the country tries to set a debt limit, balance its budget and cut expenses while growing jobs and maintaining economic and military strength throughout the world.
While the “Louisiana Way” debt is way lower than the federal burden, it still is substantial and will surely impact our commitments to education, healthcare and other government services in the near and far future.
Of that $21 billion Louisiana owes, assuming the state pays it off over 30 years with interest, isn't that approximately $500 million per year we must pay on our prior obligations which cuts into existing costs of government?
So, I wonder: when is the next plane to Wyoming?
by Stephen Sabludowsky, Publisher of Bayoubuzz.com
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