No Bankruptcy for States
Byline: The Register-Guard
The notion that deficit- ridden states should be able to declare bankruptcy is a slam dunk for the Bad Idea Hall of Fame, but don't expect it go away any time soon. Not with states across the country mired in financial despair. Tax revenues are plunging, demands for services are soaring and obligations for pensions and health care are devouring ever-larger portions of state budgets.
The idea is being pushed by a growing number of conservative activists, including Newt Gingrich and Jeb Bush (Commentary, Feb. 6). They're trying to whip up support in Congress for an amendment to federal law that would allow cash-strapped states to enter a bankruptcy process, which would enable them to restructure or unload debts owed to public employees and other creditors.
The idea is winning support among conservatives, who say it would provide a way to wipe out state debts overnight and avoid another costly federal bailout of state governments. It also would provide states a convenient way to disembowel financially and politically the public employee unions that provide pivotal support for the Democratic Party.
Conservatives cite a recent study by the Pew Center on the States, which shows a $1 trillion gap between the pension, health care and other retirement benefits that states have promised employees and the amount of money they have to fund those benefits. Some experts believe the gap actually is closer to $3 trillion.
It's an astonishing debt, one that undermines state and local governments' ability to pay for basic services for years to come. But the bankruptcy proposal, which is opposed by the National Governors Association, isn't the right response. …