For Tottering States, Bankruptcy Could Be the Answer
These are the parts of America where the public employee unions have been calling the shots, insisting on expanded payrolls, ever higher pay, hugely generous fringe benefits and utterly unsustainable pension promises.
Michael Barone at Real clear Politics
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So it’s entirely possible that some state government — California and Illinois, facing $25 billion and $15 billion deficits, are likely suspects — will be coming to Washington some time in the next two years in search of a bailout. The Obama administration may be sympathetic. It’s channeled stimulus money to states and TARP money to General Motors and Chrysler in large part to bail out its labor union allies.
How to avoid this scenario? University of Pennsylvania law professor David Skeel, writing in The Weekly Standard, suggests that Congress pass a law allowing states to go bankrupt.
The policy arguments for a bailout of California or Illinois public employee union members are incredibly weak. If Congress allows state bankruptcies, it might prevent a crisis that is plainly looming.
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