WSJ: State Bankruptcy Is a Bad IdeaSubmitted by bobbyw24 on Mon, 01/24/2011 - 09:47
Politicians already have the power to tame public unions without roiling municipal bond markets. They merely have to use it.
By E.J. MCMAHON
As states struggle with enormous deficits and exploding pension costs, some analysts are urging Congress to enact a law enabling states to declare bankruptcy the way municipalities can under Chapter 9 of the federal bankruptcy code. This is a bad idea. A state bankruptcy provision could create more problems than it solves.
Bankruptcy proponents understandably worry that states such as California and Illinois are so deep in the hole they may end up petitioning Congress for federal relief. To forestall this possibility, the argument goes, even the threat of bankruptcy would give governors and legislators a powerful new weapon for forcing concessions from recalcitrant public employee unions.