Connecticut may be the richest state in the country, on a per capita basis, but it's racked up a sizable debt worth more than $53 billion – and it could be taxpayers who are forced to bail out the Constitution State, according to the former governor of Indiana.
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“Someone’s going to the barbershop,” Mitch Daniels, a Republican, said during an interview with FOX Business’ Stuart Varney on Thursday. “The first will be the taxpayers, already beleaguered in some of these states.”
And Connecticut isn’t the only state struggling with a debt crisis: California, Illinois, New Jersey and New York are unable to make pension payments to retired government workers.
In Illinois, for instance, vendors wait months to be paid by a government that’s $30 billion in debt, and one whose bonds are just one notch above junk bond status, according to Daniels. New York’s more than $356 billion in debt; New Jersey more than $104 billion; and California more than $428 billion.
“They’re just one of a number of states, including some of the biggest states, that are in deep water,” Daniels said. “I think it is irretrievable. Pensions is the core of it. It’s not the only fiscal recklessness that they have practiced, but in some of those cases, the bill are genuinely unpayable.”
Most likely, he said, the debt will fall on state taxpayers. He warned, however, that some of these states need to be cautious about raising already high taxes that would likely not come close to the debt they’ve already racked up.
“There may be a way in some states to have a reset of the pension obligations, although in some places, they’ve actually been constitutionally protected,” he said.