According to the Federal Reserve Board, state and local credit market debt has risen rapidly in recent years, from $313 billion in 2001 to $568 billion in 2005. But unfunded obligations from state and local pension and retiree health plans -- about $2 trillion -- are still more than three times this net debt amount.
...Underfunded -- or more accurately, over-promised -- retirement plans for state and local workers have created a $2 trillion fiscal hole. Every year that policy makers put off the tough decisions, the hole gets bigger.
The problem is that the unions that demand benefits are organized, and the taxpayers who are holding the bag are not.