Debt hole is bigger than advertised

The state pensions are going to run out a lot faster than reported:

America’s red ink runs much deeper than you think. Aside from the nearly $18 trillion national debt, many state governments are looking at future budgets that are trillions of dollars in the red. And they’ve hidden the numbers by dramatically under-reporting that debt, according to a new report by the think tank State Budget Solutions.

The group looked at what are known as “unfunded liabilities” — or debt states will owe down the road. It found a number of states are fudging their numbers — big-time — using tricks like assuming their stock investments will soar.

The book-cooking could mean bad news for public pensions and other programs that rely on these budgets. The report finds that, nationwide, states have unfunded liabilities of nearly $5 trillion, or $15,000 per American.

It’s impossible to say when governments are going to stop making interest payments or finally writing off debts. But the date will almost certainly be sooner than those who work off the official statistics estimate.

Of course, the Neo-Keynesians will probably use this as an explanation for why their stimulus plans keep falling. See, they totally would have worked if only they had known the actual size of the problem, but because they didn’t have accurate information, the stimulus was too small to be effective.