Editor's Note:

Wall Street Whistleblower Warns of Meltdown, See His Uncensored Interview

The finances of many states and cities are in dire straits, meaning many of them may join Detroit in bankruptcy, says former New York Lieutenant Gov. Richard Ravitch, an adviser to the bankruptcy judge in Detroit."The crisis is deepening," he writes in The Wall Street Journal One major problem is that contributions to employee pension funds frequently fall short of the amounts necessary to make sure that benefits that are contractually or constitutionally guaranteed end up getting paid, Ravitch says.Government officials want to keep contributions low to avoid raising taxes, and public unions want to avoid layoffs and benefit reductions, he writes."The most critical piece of the states' fiscal dilemma is that they are borrowing to cover their operating deficits," Ravitch argues.As a result of state and municipal fiscal crises, investment in physical and human infrastructure is inadequate, which are "the necessary underpinning of future growth," he maintains."What this means is we can expect to see more Detroits."So what's the solution? "The federal government could condition its continued financial support on states and local governments adopting budget systems that would require recurring expenses to be matched by current revenues," Ravitch writes.Mark Warshawsky, an adjunct scholar at the American Enterprise Institute, sees the issues in similar terms to Ravitch."Two problems have become increasingly apparent and immediate: the legacy obligations promised to retirees and workers just about to retire and the funding and nature of retirement benefits being accrued now and in the future by younger and future state and local government workers," Warshawsky writes in an article for Real Clear Markets