While you’re watching this excellent 60 Minutes story on the coming implosion in state governments, remember one key statement about halfway through this from Steve Kroft: the Great Recession didn’t cause this budget insanity, it merely exposed it.  The overspending has been going on for decades, especially in places like Illinois, California, and New Jersey, as well as ridiculous union contracts that have California spending more on its public employees than it does on the entire state-owned public university systems it operates.  Illinois has gotten so bad that landlords are evicting legislators from their business offices and police officers attempting to put gas in the tanks of their patrol cars have their state credit cards declined at the pump.

Chris Christie makes it clear when discussing the rail project he had to cancel.  “We don’t have the money,” Christie explains, “we literally don’t have the money.”  He’s not the only one, either (via The Right Scoop):

The “ride to the rescue” in Porkulus didn’t produce any improvement in behavior. Instead of either facing the music and making cuts in expenditures — especially in reducing bureaucracies — the states used the Porkulus bloc-grant funding to paper over their budget gaps and punt on the hard decisions. The federal government shouldn’t have borrowed money to provide that fig leaf the first time, and they won’t get an opportunity for Round 2 fig-leafism with a GOP House.

That leaves the states on their own to do what they should have done years ago — cut spending and press for pension reform in the public-union contracts. Will the states finally take control of their budgets? If they don’t, prepare for another collapse in the banking sector.