It has become obvious in the past year that states face huge budget holes. And the federal government has come to their rescue: The $814 billion stimulus measure included over $280 billion to help states patch their budgets, and just before Congress went on its summer break, it scattered around another $26 billion to help with state health and education deficits. Despite these efforts, the cumulative budget shortfall for states next year is still projected to top $140 billion. Long-term, states also face massive shortfalls in pension benefits for public employees. They have promised over $3 trillion in retirement benefits and, according to the Pew Center, are at least $1 trillion short. How did states get into this mess? 

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