The Sinking Ship that Is the US Economy

Poor Mr. Obama. The man who ran on a campaign promise of “change,” is striving to achieve his stated goal by implementing a slew of conspicuously “same” policies, one after the other.

Admittedly, your editor doesn’t know much about drafting empty campaign promises, but he suspects that two sames don’t make a change. We’ll see.

When Captain Obama first took over at the helm of The Republic, there were plenty of leaks assailing his once-formidable ship. There was an Iraq-sized hole on the starboard side, an Afghanistan-sized breach port side. Both were taking on water…fast. Up on the quarterdeck weighed a budget deficit that seemed to grow larger every time the vessel sank beneath the wavelengths. And on the main deck, unfunded liabilities piled up, reaching higher even than the poop. Needless to say, it doesn’t take a sailor to know what that means.

Now, barely half way through his maiden voyage, Captain Obama sees the ocean cascading in from starboard and port, the quarter deck sinking below the horizon and unfunded liabilities, now towering above the main mast, threatening to capsize the entire vessel.

Meanwhile, down in the galleys, the captain’s “best” oarsmen are busy drilling their own holes in the ship’s hull.

“States from coast to coast are facing budget shortfalls of a magnitude heretofore unseen, unfathomable, even,” your editor observed in a recent reckoning.

“More than 40 states are in the red for a combined budget shortfall of $125 billion for fiscal year 2012. California is the worst, with a $25.4 billion hole to fill, more than seven times Wisconsin’s gap. Illinois comes in next with a $15 billion shortfall, followed by Texas with $13.4 billion, New Jersey at $10.5 billion and New York at $9 billion.”

It is no surprise then, that talk of mutiny can be heard from bow to stern. Some folks are even beginning to wonder if they will ever see land again.

With so many leaks to plug, trying to determine which state budget hole deserves the biggest finger is a tough call. As far as total debt goes, California and New York remain by far the biggest problems. But when it comes to debt/GDP ratios, Rhode Island and Massachusetts begin to look more ominous. Then there’s debt per capita, unfunded liability rankings, projected 2012 budget shortfalls and a slew of other factors to consider.

Your editors have no idea which state will be the first to take a long walk off a short plank…but that won’t stop us from taking a few guesses. We’ve been testing the waters by asking readers to submit their own anecdotal observations of governmental waste in their own state. It’s all part of this year’s Daily Reckoning Dodo Derby Awards: The State Edition.

In short, we wanted to know which state has taken the most earnest steps toward insolvency during the past year. Which states are nearing financial extinction? Which among them are already walking dead? After carefully considering the nominations, we’ve (naturally) selected a list of ten finalists.

In alphabetical order, the contenders for this year’s Daily Reckoning Dodo Derby Award champion are (drum roll please…):

California, Connecticut, Illinois, Louisiana, Massachusetts, Mississippi, New Jersey, New York, Ohio and Wisconsin.

Five of these tar pit-bound states will be lucky enough to earn a featured spot in next week’s Daily Reckonings. We’ll begin with fifth place on Monday and count down, through runners-up and special mentions, to the grand champion on Friday.

Meanwhile, if you happen to reside in one of the above states and would like to share with us a comment or two about money-wasting policies and idiocies going on in your own backyard, you can do so here.

Joel Bowman
for The Daily Reckoning