In the words of some politicians and pundits, public-pension reform isn't a liberal or conservative issue -- it's a reality issue. The money's just not there to fund the kind of retirement that state workers have come to expect. Reality checks led to a record number of pension-plan changes in 41 states in 2010 and 2011, as lawmakers tried to patch the cracks in the public nest egg.

Despite boasting one of the highest per capita incomes in the country, San Jose, Calif., is running large and growing deficits. The main reason is pensions and other benefits for retired city workers, such as health insurance. San Jose's problems are severe, but hardly unique. In recent years, pension costs have become a central concern both in the U.S. and in Europe.

State governments across the United States are just a few months into their fiscal years and already many fear that tax revenues are running short of forecasts. This is getting to be an annual ritual. Officials in New York, California, Florida and Washington this year have all expressed concerns about the outlook.

With little more than a week until the debt-ceiling deadline, lawmakers on both sides of Capitol Hill offered competing plans today on how to avert a crisis. 

Just the threat of a federal default is prompting California to get a $5 billion loan to make sure it can pay its obligations. States around the nation are drawing up contingency plans in the event that federal policymakers don't resolve the debt ceiling impasse by Aug. 2.