I call them MEGO numbers. That stands for My Eyes Glaze Over. Sometime the numbers are so huge that they don’t even make a dent in our consciousness. For example, the U.S. National Debt now stands at more than $39 TRILLION. And we will add another $2 Trillion in debt in this year.

The immediate reaction is to shrug. How can that impact us personally? After all, the Federal government has been overspending for years. They’ll just borrow it. The last time the government had a balanced budget was in 2001.

Those huge numbers don’t get personal until they truly hit home. For example, the Social Security independent trustees’ latest report projected that in 2033 Social Security will not have enough funds to pay all the promised benefits. That moment of truth is just 7 years away.

It’s such a painful possibility that we all believe that they will surely act in time to make some changes. But time is running out. Oh well, the government can always “print” the money – another word for inflation, devaluing the money you’ve saved.

Sooner Than You Think
But there is another MEGO number crisis brewing for millions of Americans, particularly for those who have pensions from cities, municipalities and states. Or just the people who reside in those places.

Truth in Accounting (www.TruthinAccounting.org), a think tank that analyzes government financial reports, has found that 25 state governments do not have enough money to pay all of their bills in the immediate future!
The report notes that every state, except Vermont, has a balanced budget requirement. So, they aren’t supposed to be operating at a deficit. Yet these states had a shortfall of more than $765 billion to cover their expenses at the end of fiscal year 2024, the latest year for which figures are available.

The TIA report says that to balance their budgets—as is required by law in 49 states—elected officials have shifted current costs onto future taxpayers. Either they took on more debt, or more likely, they shortchanged pension contributions. It’s a gap that will grow larger, as the Federal government cuts back its funding for states to pre-pandemic levels.

The bill is coming due sooner than you think. And when that moment happens, your state is constitutionally required to pay those pensions. To do that, they will have to cut services, or raise taxes, or sell assets.

Cities are in Worse Shape
Even worse, the latest “State of the Cities” report from TIA says: “The five biggest U.S. cities (New York City, Chicago, Los Angeles, Houston, and Philadelphia) do not have enough money to pay their bills, even after years of “balanced budget” announcements. When we include the full picture—especially unfunded pensions and retiree health benefits—these cities face a combined $240 billion shortfall.”

Oops, there are those MEGO numbers again. Let’s bring it closer to home. The report shows that for New York City the burden is $61,700 burden per taxpayer. And in Chicago the shortfall is $42,600 burden per taxpayer. In fact, they point out that if you include public school pensions in those future obligations, Chicago is in even more financial trouble than New York!

How do cities get away with this? TIA studies reveal they violate basic accounting by counting borrowed funds as “income”, by keeping pension and retiree healthcare costs off the books, and by delaying bill payments into the next fiscal year.

For example, Chicago has posted operating losses in 10 of the last 12 years, defying the balanced budget requirement. Shortfalls exceed $500 billion in 2022 and 2023, and the true accounting-based deficit exceeded $1 billion in 2024.

Oops, there go those MEGO numbers again! So, let’s get more personal.

Chicago’s municipal pension funds — covering employees, police and fire — are now only 25% funded. For every $1 in benefits earned and promised, only 25 cents has been set aside. The unfunded liability now exceeds eight times the city’s annual payroll, a level that could result in reduced spending on essential services such as schools, roads, public safety, and sanitation.

Cities such as New York and Detroit have undergone municipal restructurings, as sort of bankruptcy. But the Illinois constitution mandates that pensions must be paid. That will lead to some tough decisions. The same challenges will be felt by municipalities across the country.

States are currently legally barred, under Federal law, from declaring bankruptcy or restructuring because of “state sovereignty_ — their ability to raise taxes. Unless the law is changed, state taxes could soar, as is happening now in the state of Washington.

Creative accounting can only hide the truth for so long. By digging into the numbers has TIA been able to sort out accounting fact from fiction in the latest reports posted on its website. And the states have been delaying their reporting to obscure the oncoming crisis.

Now, the time has come to pay all those deferred promises. In real money. Those MEGO numbers, like the chickens, have come home to roost.
And that’s the Savage Truth.