We Could End Every Blue State’s Budget Deficit With One Policy. Even a Five-Year-Old Could Explain It.

If we can convince a five-year-old, we can convince our state and city representatives.

Illustration: Sarah Grillo/Axios

Note from the author: Just so you know, we need 10 people to become subscribers every article and we haven’t hit that number in 3 days despite having robust and growing readership. Don’t let this be the reason you skip a meal or miss rent. But if you can manage it, will you become an activist member of the Existentialist Republic and keep this all alive for your fellow makers of change?

Additional note: This is long because a policy, why it matters, how to effectively get this in front of politicians, how to get it passed, and then provides a “leave behind sheet for your representatives.” Hot takes are plentiful if you want them, this is a field guide for people ready to get after it.

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The United States now holds more public debt than the entire economy produces in a year. As of March 2026, the federal debt held by the public crossed 100 percent of GDP for the first time outside of a brief moment during World War Two and the COVID pandemic, with total federal debt hitting 39 trillion dollars, or roughly 114,000 dollars for every American. The federal government is borrowing $1.33 for every dollar it collects in revenue, and the projected trajectory is worse. We are not waiting for the next election to fix this. We cannot wait. With Trump and the GOP running the federal government as a criminal organization that loots the treasury and hands the keys to corporate donors, the only honest path forward is for blue cities and blue states to build their own fiscal capacity. Public banking is how they do it. This article is also the launch piece for The Existentialist Republic's Project Freedom 2026-2027.

Here is where we will start. Imagine you sit down with a five year old and tell them they have a piggy bank, and inside it is everything they’ve saved from birthdays and chores and the tooth fairy. It’s a lot. It’s theirs.

Now tell them that every morning, Mom takes the piggy bank out of their room, drives it across town, and hands it to a man named Larry who puts it in his garage and locks the door. Every time the kid wants a popsicle or a new toy, Mom has to drive across town, knock on Larry’s door, and ask for some of the money back, and Larry hands it over but charges Mom a dollar every time she comes to pick some up. Larry also lets other kids in the neighborhood borrow from the piggy bank, and when those kids pay it back, they have to pay extra on top, and Larry keeps all the extra.

The kid will look at you like you’ve lost your mind, and the kid will say, but it’s my piggy bank, why don’t we just keep it at our house?

That is the entire policy argument for public banking. The five-year-old gets it in twelve seconds, but city councils and state legislators have been saying it’s complicated for forty years, and it isn’t. We are Mom, Wall Street is Larry, the garage is JPMorgan Chase, and the popsicle is every road, every school, every bridge, every hospital we already have the money for and pay rent to access.

Public banking is the most conservative possible policy in the literal sense of conserving public money, which means anyone calling themselves fiscally responsible who opposes public banking is admitting they care more about Wall Street’s revenue than having a functioning and common sense government. The state has income, the state has expenses, and right now the state pays a private bank rent on its own money and pays Wall Street interest to borrow back what it already owns. The same is true of every city. A fiscally responsible person looks at that arrangement and says we should stop doing it immediately. A five-year-old looks at it and says the same thing in fewer syllables.

Many of our readers already know that North Dakota figured this out in 1919, when wheat farmers there were getting destroyed by banks in Minneapolis and Chicago that charged them up to twelve percent interest on loans they needed just to plant the next year’s crop, so North Dakotans built their own bank, owned by their state, and they called it the Bank of North Dakota. That bank has now operated continuously for a hundred and six years, and it remains the only state-owned, general-service bank in the country.

In 2024, the Bank of North Dakota held ten point eight billion dollars in assets, made two hundred million dollars in net income, and returned three hundred and thirty-five million dollars to the state, which is three hundred and thirty-five million dollars in a single year, in a state of seven hundred and eighty thousand people. That money paid for school construction, water projects, infrastructure repairs, and disaster recovery, and it lowered local taxes through cheaper loans on public works. North Dakota also earned the highest financial transparency ranking in the nation in 2025. The Bank of North Dakota has turned a profit every year since Woodrow Wilson was president.

To put North Dakota’s numbers in perspective, the Bank of North Dakota returned roughly four hundred and thirty dollars per resident to the state in 2024. Scaled to other state populations, the same per capita return would put the following amounts back into each state’s general fund every year:

• California, population thirty-nine million: roughly sixteen billion dollars per year

• New York, population nineteen million: roughly eight billion dollars per year

• Washington State, population seven point eight million: roughly three point three billion dollars per year

• Massachusetts, population seven million: roughly three billion dollars per year

These are scaling estimates that show the order of magnitude of what every blue state is currently leaving in Larry’s garage. The same logic applies at the city level, where the per capita return scales with population: a city of one million residents could plausibly generate over four hundred million dollars per year in dividends back to its own general fund, with additional revenue beyond that from below-market lending and avoided bond fees.

Now hold those numbers next to the budget deficits those same states are wrestling with right now:

• California: structural deficit projected to hit thirty-five billion dollars per year by 2027-28, with the 2026-27 gap between eighteen and twenty-one billion. Public bank revenue: sixteen billion per year.

• New York: cumulative three-year budget gap of 26.8 billion dollars through 2029, per the State Comptroller. Public bank revenue: eight billion per year.

• Washington State: operating budget shortfall projected in the twelve to sixteen billion dollar range over the 2025-2027 biennium. Public bank revenue: three point three billion per year, plus the avoided five billion in interest on the bond bill that prompted Senator Hasegawa’s testimony.

A public bank dividend, on its own, would close most or all of these deficits in most years. Cities running structural deficits face the same arithmetic at smaller scale, and the same solution applies.

The dividend back to the general fund is also only the visible top line. A public bank generates additional economic value that does not show up in the dividend number. The Bank of North Dakota administers more than one point one billion dollars in legislature-directed loan programs at below-market interest rates, including school construction, state infrastructure, water projects, and disaster recovery, and those savings stay in local budgets and lower local taxes. About half of BND’s loans are participations or purchases from local community banks, which expands those banks’ lending capacity and finances local business expansion that would otherwise not happen. Every time a state or city borrows from itself instead of issuing private bonds, it avoids the underwriting fees and the interest spread that would otherwise flow to private bondholders. And during economic shocks, the public bank functions as counter-cyclical capacity: BND’s partnerships with local banks gave North Dakota the highest density of approved Paycheck Protection Program loans in the country during the COVID pandemic, keeping small businesses alive at a rate other states could not match. None of that is in the four hundred and thirty dollars per resident. The dividend is the floor of what a public bank returns to a community, and the actual return is meaningfully larger.

So why are we still driving the piggy bank to Larry’s house every morning?

In February 2025, Washington State Senator Bob Hasegawa testified before the Senate Committee on Business, Financial Services and Trade in support of SB 5754, the bill to create a Washington state public bank. The math he laid out for the committee was simple. Washington State has a five billion dollar bond bill in front of the Ways and Means Committee, and the state sells those bonds at five percent interest, which means that over twenty years, Washington State will pay ten billion dollars to bondholders: five billion to build the things, and another five billion in interest on top.

Five billion dollars over twenty years, flowing out of Washington State and into the accounts of bondholders who do not live there, do not work there, and do not care whether the things being built ever get built. That is the arrangement the financial industry is paying lobbyists to protect.

Multiply that across every blue state and every blue city, every infrastructure bill, every school bond, every hospital expansion, every climate resilience project, and you start to see the scale of what we are losing. The Berkeley Haas Institute studied the cost of issuing municipal bonds and documented how layers of underwriting fees and issuance costs bleed money out of public projects before construction even begins.

A public bank changes the math entirely, because the state or city borrows from itself, and the interest comes home, and the fees come home, and the deposits work for the people of the state or city instead of working for shareholders in Manhattan.

This has been blocked for a hundred years for one reason: the people who profit from the current system are powerful, organized, and well-funded, and the people who would benefit from changing it have not been. Guess what? The formation of the Bank of North Dakota was blocked too. Then the farmers went door to door across the state, taught their neighbors about public banking, and within 2 years their approved candidates had taken over the state legislature and governors mansion.

Wall Street underwrites bond deals, holds state and city deposits, and collects fees on every transaction state and city governments make, and whenever a public banking bill gets a hearing, financial industry lobbyists show up to argue that the state has no business running a bank. Industry lobbyists said this in Washington State in 2021, in Massachusetts in 2022, and in California in 2019, and they will say it again in 2027.

But change is coming. California passed AB 857 in 2019, which authorized cities and counties to create local public banks, and it was the first major public banking legislation in the United States in a hundred years. Philadelphia City Council passed legislation in 2022 by a fifteen to one vote to establish the Philadelphia Public Financial Authority, and advocates are continuing to push the city to seat the board. New York has the New York Public Banking Act, S1992 and A6268, active in the 2025-2026 session and sponsored by Senator James Sanders and Assemblymember Clyde Vanel, which authorizes municipal and local governments to form public banks. Massachusetts has H.1114 and S.736, the Massachusetts Infrastructure Bank, sponsored by Representatives Mike Connolly and Antonio Cabral and Senator Jamie Eldridge. Washington State has SB 5754, sponsored by Senators Bob Hasegawa and Yasmin Trudeau, while New Mexico has organizing infrastructure ready through the Alliance for Local Economic Prosperity, and Oregon, New Jersey, and additional cities all have active campaigns. These bills exist, they have sponsors, and they have hearings on the calendar; what they may not have, is broad and popular public interest.

Building that movement is the work of The Existentialist Republic’s Project Freedom 2026-2027. More will be announced but the overall goal is to create the most ambitious and productive city and state legislative sessions in US History over the coming 18 months. We share the legislation and we become the citizen lobbyists that change everything, all without waiting for another round of GOP cheating, Democrat concessions, or calls to “stop being alarmist.”

Nobody gets to say its “not my job.” Everyone has something they can do for the cause of freedom and justice, because we are all stakeholders in the future. We are collaborating and participating to go on the offense for Democracy, to secure land where we have it and position ourselves to take more when the time comes, all in the furtherance of justice, freedom, and human rights.

There are 3,224 Democratic state legislators across all fifty state legislatures. I’m personally aiming to have had one on one meetings with at least ten percent of them by the end of 2026. We have been discussing the policies you read about in these articles. There are thousands more city council members, mayors, county commissioners, and other local officials for us all to advocate with. We are turning up the pressure.

The grown-up version is the one-sheet below. We print it and decide our level of commitment. The strongest version is a meeting, which means we schedule a sit-down with our state or city representative, walk in with the one-sheet in our hands, and come out with a commitment. If our state or city has an active bill, the ask is cosponsorship and a public commitment to vote yes in committee, and if it has no active bill yet, the ask is a commitment to introduce one in the next session, with an offer to connect the rep’s office to model legislation which the ER is more than happy to provide upon request.

If a sit-down is not yet in reach, phone calls and letters are good too, especially when staffers start hearing the same request from constituents in the same week. A call that references the bill number and asks how the rep plans to vote gets logged, and a handwritten letter that names the bill, the ask, and the deadline still gets read in most state and city offices, and the one-sheet gives us the raw material for both, so the work compounds when constituents are persistent and numerous.

The multiplication engine version of this work happens through groups. If you belong to an Indivisible chapter, a county Democratic committee, a labor council, a faith group, or any other organized body with a membership and a vote, we ask to put public banking on the agenda, bring the one-sheet, educate the members, and then ask the group to vote on a formal endorsement of public banking legislation in our state or city. Once the group endorses, we contact our reps and tell them that an organization with however many members has voted to endorse this policy and is asking for their position on the record, because a vote from two hundred organized members is more substantial than a single phone call, a vote from a coalition of five groups carries more weight than that, and this is how influence becomes undeniable. We are asking reps to commit, on the record, with constituents and organized groups watching.

Public banking belongs at the center of every blue city and state’s legislative agenda for the remaining 2026 and 2027 sessions because it is the only major lever that funds the rest of the agenda rather than competing with it. Universal pre-K, climate resilience, universal healthcare, and public housing all cost money, and city and state legislators say no to good policy almost every day because the budget is already stretched. Every business understands that startup investment is necessary for future revenue generation, but corporate-owned representatives want to pretend that the only way to fund projects that benefit the public is by raising taxes.

Public banking unsticks the budget. When a rep hears the universal pre-K pitch, their first instinct is to ask where the money comes from. With a public bank in place, the answer is simple: the money comes from the bank’s annual returns, which flow into the state or city general fund every year. North Dakota’s bank generated three hundred and thirty-five million dollars in returns to the state in 2024 alone. Scaled to a larger blue state, a public bank would generate billions per year in ongoing revenue that funds the rest of the agenda. We can improve our state and city budget health by investing in public works. Everything else in the agenda rides on top of public banking.

Here is how we say it to a state senator or a city council member. The money is in the budget. It is sitting in a private bank, generating returns for someone else. We are asking you to bring it home, just like the people of North Dakota have been doing for over a century.

Or if all your reps are republicans than you’re welcome to use the the five-year-old version of this conversation: we want our piggy bank back. Just make sure to also tell them how smart they are after, they love praise.

The kid in the piggy bank story would have figured this out by lunch. State and city legislators have been working on it for a hundred years. We are going to make 2027 the year they finish the job and bring the piggy bank home.

What follows is the one-sheet for meetings, which we bring to the meeting, leave with the staffer, and follow up on in thirty days.

Every blue city and state’s budget deficit could be closed with a public bank. North Dakota has run one since 1919, and in 2024 the Bank of North Dakota generated two hundred million dollars in net income on ten point eight billion in assets and returned three hundred and thirty-five million dollars to the state, including funding for school construction, water projects, infrastructure, and disaster recovery. That works out to roughly four hundred and thirty dollars per resident in a single year. Scaled to larger state populations, the same per capita return would generate the following annual revenue:

• California: roughly sixteen billion dollars per year, against a structural deficit projected to hit thirty-five billion by 2027-28

• New York: roughly eight billion dollars per year, against a cumulative three-year budget gap of 26.8 billion through 2029

• Washington State: roughly three point three billion dollars per year, against a 2025-2027 biennium shortfall of twelve to sixteen billion

• Massachusetts: roughly three billion dollars per year

The same per capita logic applies at the city level. A city of one million residents could plausibly generate over four hundred million dollars per year in dividends back to its own general fund. A public bank dividend, on its own, would close most or all of these deficits in most years. Every other state and city pays Wall Street to hold its deposits and pays interest plus underwriting fees on every bond it issues, and a public bank ends that arrangement: the interest payments come home, the fees come home, and the deposits work for the community instead of working for private shareholders.

The dividend is also only the visible top line. A public bank generates additional economic value that does not show up in the dividend number, including below-market interest rates on loans for school construction, infrastructure, water projects, and disaster recovery, expanded lending capacity at local community banks through participation lending, avoided underwriting fees and interest spreads on bond issuance, and counter-cyclical capacity during economic shocks of the kind that gave North Dakota the highest density of approved Paycheck Protection Program loans in the country during COVID. The actual return to a state or city with a public bank is meaningfully larger than the dividend alone.

The first objection a rep will raise is that government has no business running a bank, but North Dakota has run one for a hundred and six years and earned a profit every year since its founding. Standard and Poor’s rates it A-plus stable, North Dakota earned the highest financial transparency ranking in the nation in 2025, and the track record is the longest-running successful state bank in American history.

The second objection is that taxpayers will be on the hook for losses, but the Bank of North Dakota’s net charge-off rate has been under fifteen basis points annually for a decade, despite heavy exposure to volatile agriculture and energy sectors, which is among the strongest credit performance of any bank in the country. Public banks are designed to be conservative because they serve a public mission, and they avoid the speculative games that took down private banks in 2008.

The third objection is that local banks will be hurt by competition, but the Bank of North Dakota does not compete with local banks; it partners with them, and BND structures roughly half of its loans as participations or purchases from local banks, expanding their lending capacity. A 2011 Boston Federal Reserve report found that the BND enhances the viability of small banks in North Dakota, and during the COVID pandemic, BND’s partnerships with local banks gave North Dakota the highest density of approved Paycheck Protection Program loans in the country.

The proof of concept is the Bank of North Dakota itself, founded in 1919, which in 2024 held total assets of ten point eight billion dollars, generated net income of two hundred million dollars, returned three hundred and thirty-five million dollars to the state, achieved a return on investment of fifteen point eight percent, maintained a loan portfolio of six point one billion dollars, and administered more than one point one billion dollars in legislature-directed loan programs covering school construction, state infrastructure, water projects, and disaster recovery.

Active legislation in the 2025-2026 sessions is moving in multiple states, and authorizing legislation already exists at the city level in California and Pennsylvania. New York has S1992 and A6268, the New York Public Banking Act, sponsored by Senator James Sanders and Assemblymember Clyde Vanel and authorizing municipal and local public banks. Massachusetts has H.1114 and S.736, the Massachusetts Infrastructure Bank, sponsored by Representatives Mike Connolly and Antonio Cabral and Senator Jamie Eldridge. Washington State has SB 5754, sponsored by Senators Bob Hasegawa and Yasmin Trudeau, creating the Washington State Public Bank as a cooperative for local and tribal governments. California passed AB 857 in 2019 authorizing local public banks, and Philadelphia City Council passed legislation in 2022 by a fifteen to one vote to establish the Philadelphia Public Financial Authority. New Mexico has an active campaign through the Alliance for Local Economic Prosperity, and Oregon and New Jersey have additional active organizing.

If our state or city has an active bill, the ask is cosponsorship and a public commitment to vote yes in committee, and if it does not have an active bill, the ask is a commitment to introduce one in the next session, with an offer to connect the office to model legislation and to the network of legislators and council members in other places already working on this; either way, the ask ends with a follow-up meeting in thirty days to confirm that movement has happened.

End of Leave Behind Sheet

One last thing, I wanted you to know that we need 10 people to become subscribers every article and we haven’t hit that number in 3 days despite having robust and growing readership. Don’t let this be the reason you skip a meal or miss rent. But if you can manage it, will you become an activist member of the Existentialist Republic and keep this all alive for your fellow makers of change?

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