One reads of the crisis in Greece. And the one much closer to home in Puerto Rico. The crisis, that is, that inevitably comes after spending too much and taking on more debt than it is possible even to service, much less pay down. One thinks of how unfortunate it is for the people who will now redeem with pain, the promises made by the politicians of previous generations. And then, gives thanks that it can’t happen here.
Except … remember Detroit which once had the highest per-capita income of any American city and was obliged, not so long ago, to declare bankruptcy. And now, some early signs of distress in Chicago. As Bill Ruthhart and Heather Gillers of the Chicago Tribune report:
Chicago Public Schools officials warned Wednesday that without relief from their next massive pension contribution, they would have to make $500 million in additional cuts in the coming year, on top of looming cuts they say will be caused by this year's pension payment.
The inevitable crisis was deferred as:
The district has more than $1.1 billion in new short-term borrowing authority approved last week by the school board, on top of $500 million in authority it already had. But $700 million of the district's debt must be repaid by early October, with the rest due a year later.
That could lead to the district running out of cash to pay all its bills during the coming school year — unless there are significant education cuts, new revenue or a combination of the two.
As we have witnessed with the situation in Greece, when you hit that wall … you hit hard.