Fate of the States: The New Geography of American Prosperity

by Meredith Whitney

  35. Nicholas Johnson, Phil Oliff, and Erica Williams, “An Update on State Budget Cuts: At Least 46 States Have Imposed Cuts That Hurt Vulnerable Residents and the Economy,” Center on Budget and Policy Priorities, February 9, 2011, http://www.cbpp.org/cms/index.cfm?fa=view&id=1214.

  36. U.S. Department of Commerce, U.S. Census Bureau, “Housing Vacancies and Homeownership (CPS/HVS): 2012,” table 5: “Homeownership Rates for the United States: 1968 to 2012,” http://www.census.gov/housing/hvs/files/qtr312/tab5.xls.

  37. Board of Governors of the Federal Reserve System, “Mortgage Debt Outstanding,” December 2012, http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm.

  38. Meredith Whitney Advisory Group, “Tragedy of the Commons Third Edition: 2012 Update,” p. 50, September 21, 2012.

  39. Federal Reserve Bank of New York, “Quarterly Report on Household Debt and Credit,” August 2010, http://www.newyorkfed.org/research/national_economy/householdcredit/DistrictReport_Q22010.pdf, “Historical Reports: Statistics by year,” http://www.newyorkfed.org/research/national_economy/householdcredit/area_report_by_year.xlsx; U.S. Department of Commerce, Bureau of Economic Analysis, Regional Data, GDP and Personal Income, Quarterly State Personal Income, http://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=3#reqid=70&step=1&isuri=1.

  40. Dan Fitzpatrick, “Need a Loan? Where Do You Live?” Wall Street Journal, September 26, 2012, http://online.wsj.com/article/SB10000872396390443328404578020501373436128.html.

  41. Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit, November 2012, http://www.newyorkfed.org/research/national_economy/householdcredit/DistrictReport_Q32012.pdf.

  42. Federal Reserve Bank of New York, “Historical Reports: Statistics by area and year,” http://www.newyorkfed.org/research/national_economy/householdcredit/area_report_by_year.xlsx.

  43. U.S. Small Business Administration, Frequently Asked Questions, http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24.

  44. Michael J. Carr, Dun and Bradstreet Credibility Corp., “Real Statistics Show That 70 Percent of Small Businesses Succeed at First,” August 6, 2012, http://business.dnb.com/small-business-information/real-statistics-show-that-70-percent-of-small-businesses-succeed-at-first/; Federal Housing Finance Agency, Downloadable Data, Purchase Only Indexes: U.S. Summary through 2012Q4, http://www.fhfa.gov/Default.aspx?Page=87, http://www.fhfa.gov/webfiles/24974/4q12POSummary.xls.

  45. CNBC, “America’s Top States for Business 2012: #40 California,” http://www.cnbc.com/id/100013714.

  46. Federal Housing Finance Agency, Downloadable Data, Purchase Only Indexes: U.S. Summary through 2012Q4, http://www.fhfa.gov/Default.aspx?Page=87, http://www.fhfa.gov/webfiles/24974/4q12POSummary.xls; U.S. Department of Labor, Bureau of Labor Statistics, Local Area Unemployment Statistics, http://www.bls.gov/lau/lastrk11.htm, http://www.bls.gov/lau/lastrk10.htm, http://www.bls.gov/lau/lastrk09.htm, http://www.bls.gov/lau/lastrk08.htm, http://www.bls.gov/lau/lastrk07.htm; U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, http://data.bls.gov/pdq/SurveyOutputServlet.

  47. Federal Reserve Bank of New York, “Quarterly Report on Household Debt and Credit,” November 2012, http://www.newyorkfed.org/research/national_economy/householdcredit/DistrictReport_Q32012.pdf; Meredith Whitney Advisory Group, “U.S. Consumer Spending Outlook 2012.”

  48. U.S. Bureau of Economic Analysis, Regional Data, GDP and Personal Income, http://www.bea.gov/iTable/iTable.cfm?ReqID=70&step=1#reqid=70&step=1&isuri=1; Meredith Whitney Advisory Group, “Rebalancing of the U.S. Economy: State Analysis.”

  49. U.S. Department of Commerce, U.S. Census Bureau, “Population Estimates: Historical Data: 2000s,” http://www.census.gov/popest/data/historical/2000s/index.html.

  50. Federal Reserve Bank of New York; CoreLogic LoanPerformance Data; Meredith Whitney Advisory Group; Wikipedia, “Subprime Mortgage Crisis,” http://en.wikipedia.org/wiki/Subprime_mortgage_crisis.

  51. Federal Reserve Bank of New York, “Quarterly Report on Household Debt and Credit,” November 2012, http://www.newyorkfed.org/research/national_economy/householdcredit/DistrictReport_Q32012.pdf; U.S. Department of Commerce, U.S. Census Bureau, Population Estimates, 2012 State Total Population Estimates, http://www.census.gov/popest/; U.S. Department of Commerce, Bureau of Economic Analysis, Regional Data, GDP & Personal Income, Quarterly State Personal Income, http://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=3#reqid=70&step=1&isuri=1.

  52. Meredith Whitney Advisory Group, “Tragedy of the Commons Third Edition: 2012 Update,” p. 50, September 21, 2012.

  53. Gary Rivlin, “It’s a Hot Time to Be a Pawn Star,” Daily Beast, June 19, 2011, http://www.thedailybeast.com/newsweek/2011/06/19/it-s-a-hot-time-to-be-a-pawn-star.html.

  54. Jennifer Oldham, “Nevada Desert Drowning in Sea of Underwater Loans,” Bloomberg Businessweek, September 13, 2012, http://www.businessweek.com/news/2012-09-13/nevada-desert-drowning-as-underwater-loans-hurt-schools-police.

  55. Federal Reserve Bank of New York, Household Debt and Credit Report, Historical Reports: Statistics by area and year, http://www.newyorkfed.org/householdcredit/.

  56. Dan Chapman and Jeffry Scott, “Boom Goes Bust in Atlanta’s Exurbs,” Atlanta Journal-Constituition, September 7, 2010, http://www.ajc.com/news/business/boom-goes-bust-in-atlantas-exurbs/nQj2w/.

  57. Jenifer Shockley, Georgia State University, “Economy to Grind Out Reasonable Growth in 2012,” February 23, 2012, http://robinson.gsu.edu/news/6221.html.

  Chapter 4: Pensions: The Debt Bomb Nobody’s Talking About

  1. Caitlin Kenney, “Firefighters Deal with Community Backlash,” National Public Radio, December 26, 2012, http://m.npr.org/news/Business/168059128; National Public Radio, Planet Money, “Episode 424: How Much Is a Firefighter Worth?” December 18, 2012, http://www.npr.org/blogs/money/2012/12/18/167265874/episode-424-how-much-is-a-firefighter-worth.

  2. Meredith Whitney Advisory Group, “Our Annual Pension and OPEB Analysis: Deterioration Continues and Meaningful Accounting Reform Looms.”

  3. Pew Center, “The Widening Gap Update,” June 18, 2012, http://www.pewstates.org/research/reports/the-widening-gap-update-85899398241; Meredith Whitney Advisory Group, “The 50 Dirtiest Little Secrets: New Analysis on States’ Underfunded Pensions, Healthcare, and Other Off Balance Sheet Obligations,” May 2, 2011, p. 17; State Comprehensive Annual Financial Reports; Meredith Whitney Advisory Group, “Tragedy of Commons Third Edition: 2012 Update,” p. 26.

  4. Gina Raimondo, in conversation with Meredith Whitney, September 10, 2012.

  5. Jess Jiang, “The Deadliest Jobs in America, in One Graphic,” National Public Radio, January 23, 2013, http://www.npr.org/blogs/money/2013/01/08/168897140/the-deadliest-jobs-in-america-in-one-graphic.

  6. Governmental Accounting Standards Board, “GASB Moves to Improve Pension Disclosures,” February 2007, http://www.gasb.org/cs/BlobServer?blobkey=id&blobwhere=1175820457268&blobheader=application%2Fpdf&blobcol=urldata&blobtable=MungoBlobs.

  7. Robert Novy-Marx and Joshua D. Rauh, “Public Pension Promises: How Big Are They and What Are They Worth?” December 18, 2009, http://econ.as.nyu.edu/docs/IO/14310/Rauh_20100310.pdf.

  8. U.S. Department of Commerce, U.S. Census Bureau, Population Estimates, 2012 State Total Population Estimates, http://www.census.gov/popest/; Federal Reserve Bank of New York; Bureau of Economic Analysis; Moody’s Investors Service, “2011 State Debt Medians Report,” http://www.vermonttreasurer.gov/sites/treasurer/files/pdf/bonds/Moody’s%20State%20Debt%20Medians%202011-corrected.pdf.

  9. NARSA Issue Brief, Employee Contributions to Public Pension Funds, January 2013, http://wikipension.com/images/8/8e/Issuebrief130102.pdf.

  10. U.S. Social Security Administration, Social Security Cost-of-Living Adjustments, http://www.ssa.gov/oact/cola/colaseries.html; U.S. Social Security Administration, Measure of Central Tendency for Wage Data, http://www.ssa.gov/oact/cola/central.html.


  11. Jilian Mincer, “Public Pension Funds to Face Calls to Set Realistic Targets,” Reuters, July 23, 2012, http://www.reuters.com/article/2012/07/23/us-usa-pensions-finreturns-idUSBRE86M1AA20120723.

  12. Terrence Dopp, “N.J. Towns Borrow $200,000 Farewells Christie Abhors,” Bloomberg, August 10, 2012, http://www.bloomberg.com/news/2012-08-10/n-j-towns-borrow-for-200-000-farewells-christie-abhors.html.

  13. Edward Mangano, interview by Meredith Whitney, July 3, 2012.

  14. NARSA Issue Brief: Public Pension Plan Investment Return Assumptions, January 2013, http://www.nasra.org/resources/issuebrief120626.pdf; State Comprehensive Annual Financial Reports; Gina M. Raimondo, “Truth in Numbers: The Security and Sustainability of Rhode Island’s Retirement System,” Office of the General Treasurer of Rhode Island, June 2011, http://www.treasury.ri.gov/documents/SPRI/TIN-WEB-06-1-11.pdf; Meredith Whitney Advisory Group, “Our Annual Pension and OPEB Analysis: Deterioration Continues and Meaningful Accounting Reform Looms,” pp. 16 and 27.

  15. U.S. Department of Commerce, U.S. Census Bureau, “Annual Survey of Public Pensions: State and Local Data,” 2011, http://www.census.gov/govs/retire/; U.S. Department of Commerce, U.S. Census Bureau, State and Local Government Finance, 2010 State and Local Government: Missouri—Wyoming, http://www.census.gov/govs/estimate/.

  16. Meredith Whitney Advisory Group, “Tragedy of Commons: Comprehensive Update and Expansion of Coverage to 25 States,” p. 33.

  17. The Pew Center on the States, Issue Brief: The Widening Gap Update, June 2012, http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pew_Pensions_Update.pdf; “Governor Cuomo Announces Passage of Major Pension Reform,” Governor’s Press Office, March 15, 2012, http://www.governor.ny.gov/press/03152012pensionagreement.

  18. Mary Williams Walsh, “Illinois Debt Takes Toll, Study Finds,” New York Times, October 24, 2012, http://www.nytimes.com/2012/10/25/business/illinois-debt-takes-toll-on-services-study-finds.html.

  19. “Stop the Pension Bond Rush,” Chicago Tribune, March 25, 2003, http://articles.chicagotribune.com/2003-03-25/news/0303250298_1_pension-bond-borrowing-plan-bond-plan.

  20. Meredith Whitney Advisory Group, “50 Dirtiest Little Secrets: New Analysis on States’ Underfunded Pensions, Healthcare, and Other Off Balance Sheet Obligations”; Pew Center on the States, Issue Brief: The Widening Gap Update, June 2012, http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pew_Pensions_Update.pdf; U.S. Department of Commerce, U.S. Census Bureau, State and Local Government Finance, Historical Data: 2002, “US Summary & Alabama-Mississippi,” http://www2.census.gov/govs/estimate/02slsstab2a.xls; Bloomberg.

  21. “Not So Fast, Legislators,” Chicago Tribune, January 3, 2011, http://articles.chicagotribune.com/2011-01-03/news/ct-edit-legis-20110103_1_legislative-session-state-capital-illinois; Jonathan Ingram, “Illinois’ $44 Billion Retiree Health Pricetag,” Illinois Policy Institute, March 6, 2012, http://illinoispolicy.org/blog/blog.asp?ArticleSource=4719.

  22. National Center for Education Statistics, “Fast Facts,” http://nces.ed.gov/fastfacts/display.asp?id=28.

  23. Michael Pearson and Holly Yan, “Official: No Deal Yet Between Chicago Teachers and School System,” CNN, September 10, 2012, http://www.cnn.com/2012/09/10/us/illinois-chicago-teachers-strike/index.html.

  24. “How San Diego’s Pension Problems Compare,” NBC 7 San Diego, January 3, 2013, http://www.nbcsandiego.com/news/local/How-San-Diegos-Pension-Problems-Compare-185480942.html.

  25. Alison Vekshin and James Nash, “California Pension Victories Could Catch On Nationwide,” Bloomberg, June 6, 2012, http://www.bloomberg.com/news/2012-06-06/san-diego-san-jose-voters-approve-pension-cost-limits.html.

  26. Elliot Spagat, “2 California Cities Vote on Public Pension Cuts,” Bloomberg Businessweek, June 5, 2012, http://www.businessweek.com/ap/2012-06/D9V75GP00.htm.

  27. Stephen Goldsmith, “A Mayor’s Roadmap for Reforming Pensions,” Governing, July 16, 2012, http://www.governing.com/blogs/bfc/col-san-diego-mayor-jerry-sanders-pension-reform.html.

  Chapter 5: The Negative Feedback Loop from Hell

  1. Elliot Spagat, “2 California Cities Vote on Public Pension Cuts,” Bloomberg Businessweek, June 5, 2012, http://www.businessweek.com/ap/2012-06/D9V75GP00.htm; U.S. Department of Commerce, Bureau of Economic Analysis, News Release: Personal Income for Metropolitan Areas, 2005, http://www.bea.gov/newsreleases/regional/lapi/2006/mpi0906.htm.

  2. Colleen May, “Strategic Planning for the Future of Las Vegas,” 8 News NOW, KLAS-TV Las Vegas, September 19, 2005, http://www.8newsnow.com/story/3870884/strategic-planning-for-the-future-of-las-vegas?clienttype=printable.

  3. Federal Housing Finance Agency, “City HPI Data, MSA HPI Comparisons,” 2012, http://www.fhfa.gov/Default.aspx?Page=216&Type=compare&Area1=29820&Area2=&Area3=; Federal Housing Finance Agency, Downloadable Data, Purchase Only Indexes: U.S. Summary through 2012Q4, http://www.fhfa.gov/Default.aspx?Page=87, http://www.fhfa.gov/webfiles/24974/4q12POSummary.xls; CoreLogic, “CoreLogic Third Quarter 2011 Negative Equity Data Shows Slight Decline But Remains Elevated,” November 29, 2011, http://www.corelogic.com/about-us/news/corelogic-third-quarter-2011-negative-equity-data-shows-slight-decline-but-remains-elevated.aspx; Michael Leachman, Erica Williams, and Nicholas Johnson, “Governors Are Proposing Further Deep Cuts in Services, Likely Harming Their Economics,” Center on Budget and Policy Priorities, March 21, 2011, http://www.cbpp.org/cms/index.cfm?fa=view&id=3389.

  4. Paul Takahashi, “School District to Lay Off 1,015 Teachers, Literacy Specialists,” Las Vegas Sun, May 16, 2012, http://www.lasvegassun.com/news/2012/may/16/school-district-lay-1015-teachers-and-literacy-spe/.

  5. Paul Takahashi, “School District Sends Pink Slips to 419 Teachers,” Las Vegas Sun, June 11, 2012, http://www.lasvegassun.com/news/2012/jun/11/school-district-sends-pink-slips-400-teachers/.

  6. Clark County School District, “Comprehensive Annual Budget Report: Statistical Data,” p. 164, July 1, 2012, http://ccsd.net/resources/budget-finance-department/pdf/publications/cabr/2013/statistical-data.pdf.

  7. Annie E. Casey Foundation, “Data Across States: Per-Pupil Educational Expenditures Adjusted for Regional Cost Differences (Currency): 2009,” March 2012, http://datacenter.kidscount.org/data/acrossstates/Rankings.aspx?loct=2&by=a&order=a&ind=5199&dtm=11678&tf=38.

  8. National Governors Association and National Association of State Budget Officers, “The Fiscal Survey of States,” Fall 2012, http://www.nasbo.org/sites/default/files/Fall%202012%20Fiscal%20Survey_Final%20Version.pdf ; National Governors Association and National Association of State Budget Officers, “The Fiscal Survey of States,” Spring 2012, http://www.nasbo.org/sites/default/files/Spring%202012%20Fiscal%20Survey_1.pdf.

  9. U.S. Census Bureau, “Quarterly Summary of State and Local Taxes,” table 2: “Historical National Totals of State Tax Revenue,” http://www.census.gov/govs/qtax/table_2.html; U.S. Census Bureau, State Government Finances, Historical Data: 2000 Annual Survey of State Government Finances, http://www.census.gov/govs/state/historical_data_2000.html; U.S. Census Bureau, State Government Finances, Historical Data: 2010 Annual Survey of State Government Finances, http://www.census.gov/govs/state/historical_data_2010.html.

  10. National Association of State Budget Officers, “State Expenditure Report: Examining Fiscal 2010–2012 State Spending,” 2012, http://www.nasbo.org/sites/default/files/State%20Expenditure%20Report_1.pdf; U.S. Census Bureau, State Government Finances, Historical Data: 2009 Annual Survey of State Government Finances, Summary Table, http://www.census.gov/govs/state/historical_data_2009.html; U.S. Census Bureau, State Government Finances, 2011 Annual Survey of State Government Finances, Summary Table, http://www.census.gov/govs/state/.

  11. Ryan Hagen, “San Bernardino City Attorney: Evidence of Budget Falsification Given to Other Agencies,” Sun (San Bernardino County), July 11, 2012, http://www.sbsun.com/ci_21052495/breaking-news-san-bernardino-mayor-morris-addresses-citys.

  12. Fitch Ratings, “U.S. Local Government Downgrades to Persi
st,” August 20, 2012, http://voiceofdetroit.net/wp-content/uploads/2012/11/Fitch-Ratings-Local-Govt-Downgrades-to-Persist.pdf.

  13. Reuters, “San Bernardino Bankruptcy May Start Trend for California Cities: Moody’s,” August 9, 2012, http://www.reuters.com/article/2012/08/10/us-municipals-sanbernardino-idUSBRE87902L20120810.

  14. Federal Reserve Bank of St. Louis, FRED Economic Data, Graph: State and Local Bonds—Bond Buyer Go 20-Bond Municipal Bond Index (WSLB20), http://research.stlouisfed.org/fred2/graph/?s[1][id]=WSLB20.

  15. Organisation for Economic Co-operation and Development, “Special Feature: Trends in Personal Income Tax and Employee Social Security Contribution Schedules,” 2012, http://www.oecd.org/tax/taxpolicyanalysis/50131824.pdf.

  16. Trading Economics, Greece Unemployment Rate, http://www.tradingeconomics.com/greece/unemployment-rate; Trading Economics, Greece GDP Annual Growth Rate, http://www.tradingeconomics.com/greece/gdp-growth-annual.

  17. Ioanna Fotiadi, “Smaller Companies Heading to Bulgaria in Droves,” Ekathimerini.com, June 11, 2012, http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_11/06/2012_446468.

  18. Li-mei Hoang and Renee Maltezou, “Families Leaving Greece in Droves to Stay Afloat Financially,” April 28, 2012, http://business.financialpost.com/2012/04/28/families-leaving-greece-in-droves-to-stay-afloat-financially/.

  19. Elizabeth McNichol, “Out of Balance: Cuts in Services Have Been States’ Primary Response to Budget Gaps, Harming the Nation’s Economy,” Center on Budget and Policy Priorities, April 18, 2012, http://www.cbpp.org/cms/index.cfm?fa=view&id=3747.

  20. State Budget Solutions, “K-12 Education,” http://www.statebudgetsolutions.org/issues/detail/k-12-education.

  21. Phil Oliff and Michael Leachman, “New School Year Brings Steep Cuts in State Funding for Schools,” Center on Budget and Policy Priorities, October 7, 2011, http://www.cbpp.org/cms/?fa=view&id=3569.