Volcker Report Sees U.S. Cuts as Threatening States

Budget cuts in Washington may put added pressure on state governments already strained by employee pensions and rising health-care costs, according to a report by a group led by former Federal Reserve Chairman Paul Volcker.

Congress’s need to reduce the budget deficit jeopardizes state aid as well as tax breaks, including those for buyers of municipal bonds, which assist state and local governments, according to the report released today by a panel of former government officials. It’s led by Volcker, 84, and Richard Ravitch, 79, New York’s Lieutenant Governor in 2009 and 2010 and state adviser during New York City’s fiscal crisis in the 1970s.