August 1, 2013
It came as no surprise when Detroit filed for bankruptcy last month. The city had been going downhill for quite some time. Faced with a declining economy and a dwindling population, city leaders refused to cut spending and instead hiked taxes. These policies drove away the individuals and businesses who were to pay for the escalating debt.
Unfortunately, Detroit isn’t alone in its fiscal mismanagement. The Heritage Foundation’s Alison Fraser and Corrine Williams point out that Illinois may follow Detroit:
It is no secret that Illinois is in debt; the state’s Comptroller estimates it to be approximately $160 billion. Nearly $100 billion of this stems, like Detroit, from unfunded pension costs. Recently, Taxpayers United President Jim Tobin explained that without pension reforms Illinois will be pushed to the brink. According to Tobin, it is likely to happen in less than two years.
“Unlike Detroit,” they add, “changes in the manufacturing industry will not contribute to the demise of the Land of Lincoln. Rather, the profligacy and complacency of its leaders may.”
Should the federal government bail out Illinois if its finances collapse?