While Greece’s public debt — which the Goldman currency swaps were designed to help hide — amounts to 113 percent of its GDP currently, it turns out that Greece and its EU partners aren’t the only one keeping debts off the books and using complex accounting techniques to hide them. Mary Williams Walsh reports in The New York Times that many states engaged in the same behavior and, like Greece, are about to face a major reckoning.
California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.
New Hampshire and Colorado attempted to use program-specific pots of state money to plug holes in their general treasuries; Connecticut wrote its own accounting rules; Hawaii reduced the length of its school week; and California made its businesses pay their 2010 taxes earlier to make the budget appear more balanced than it is. But one thing every state is doing, including Alaska, is camouflaging its debts by not releasing how much its state employee pension funds will owe — or how far behind it is on its contributions to said pension funds.
Less than a year after then-Gov. Sarah Palin (R-Alaska) quit the government to pursue other projects, Alaska leads the way in its debt-to-GDP ratio when its unfunded pension obligations are taken into account, followed by Rhode Island, New Mexico, Ohio and Mississippi. And although Alaska’s ratio is far lower than Greece’s, it does give the state a debt-to-GDP ratio similar to that of Jordan and Palin’s favorite health care resource, Canada, and a higher ratio than Ghana, Cote d’Ivoire, India, the Philippines or Uruguay.