State And Municipal Debt: Tough Choices Ahead
Chairman Darrell Issa Hearing Preview Statement
Thursday's Full Committee hearing builds on the work of our Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs, Chaired by Representative Patrick McHenry. These hearings have taken a hard look at the severity of fiscal problems faced by states and municipalities, examples of reforms that could put governments on sustainable paths, and the role the federal government has played in aggravating state budget problems.
Subcommittee Chairman McHenry made one thing very clear in the first of these hearings: there will be no more bailouts on our watch. The evidence shows that states still have the ability to turn around their bleak financial situations. For too long, taxpayers across our country have been held hostage by shady accounting and politically-driven promises that are untenable. We are witnesses to a slow motion budgetary train wreck. It will not be easy and it must be done soon, but there is still time to hit the brakes.
To understand impediments to reform and what it takes to climb out of a deep fiscal hole, Wisconsin Governor Scott Walker will testify about how he successfully championed sweeping reforms that will keep his state solvent. Moody's, a credit rating agency, recently announced that the reforms will have a positive impact on Wisconsin's credit rating, a further testament to the merits of Governor Walker's courageous efforts.
Governor Peter Shumlin of Vermont will also offer insight into how long-term challenges are being addressed in his state.
Finally, the hearing will feature experts who understand the inevitable pain that would accompany inaction.
At a time when our federal government is eye-to-eye with a debt burden that threatens our ability to win the future, it is imperative that states do not cross the point of no return. Make no mistake: U.S. states and municipalities are starting to look increasingly like Greece, Spain, and Portugal. According to economists that have used accurate accounting practices to gauge the depth of the problem, there are currently over $3.5 trillion in unfunded pension liabilities at the state and municipal levels. There is no time to waste.