This is the Cato Daily Podcast for Friday, June 12, 2020. I'm Caleb Brown.

The coronavirus and related government ordered shutdowns have put major holes in state budgets

and state pensions that are unusually reliant on both the stock market and state level tax

revenue or hit especially hard.

Andrew Biggs is a resident scholar at the American Enterprise Institute.

We discussed how states can move forward with reforming pensions now that the reality of pension

funding is so much harder to avoid.

For those who have been looking at their own individual 401k statements the last few months

have been quite a roller coaster.

They've seen big declines in stock markets and, you know, largely, for the most part, a pretty quick recovery.

The employment picture seems to also be recovering pretty well, improving pretty dramatically just in the last few weeks alone.

What has been the impact of all of this roller coaster on state debt and state pensions in

particular.

Well a lot of that remains to be seen and it's going to differ quite a bit from one state to the next.

Based not just on how much they were affected by COVID and the recession,

but also how well prepared they were to begin with. A number of states have been

in pretty good shape, pretty responsible with their spending, they've fixed their pension systems,

which are really the big driver here. Other states you know you're

you're bad actors you're Illinois's New Jersey's they came into this in very tough shape

and it's it's going to be a difficult year or two for them and it's not

really clear whether their political systems are capable of making the kinds of

changes they need to make. And you know, in March and April, when the stock market was down so tremendously, my first thought was with respect to state governments trying to meet all of their various obligations

...