This is the Cato Daily Podcast for Friday, August 17th, 2007.

I'm Caleb Brown.

New accounting rules are forcing states to recognize billions of dollars in retirement obligations

now rather than later.

These billions of dollars in liabilities will threaten state budgets and state economies,

and when you add Medicare and Social Security, the numbers become mind-boggling.

Cato Institute Senior Fellow Jagadish Gokalais suggests that these staggering numbers have yet

to be incorporated into financial market expectations

or state budget processes. In any case, he says fixing the problem will require some politically

unpalatable solutions. Describe the scope of the problem that states are having with these post-retirement

benefits that they are promising to state and local government workers.

Yeah, the new GASB rule has just coming into it has just come into effect and over the next

three years or so state and local entities will have to report on their books the liabilities on post-employment benefits that they have provided or promised their employees.

And now many state and local governments who are estimating how large these liabilities are,

are discovering that they run into billions of dollars.

The state of New Jersey just reported

58 billion dollars in liabilities to state. The state and local government employees, on

on the state and local government employees

on account of future that is post employment health care benefits.

Similarly, New York, Maryland, California, states like North Carolina

have already estimated their liabilities to be in also running into billions of

dollars.

...