David Guaspari asks:
It seems clear that the political classes of New York and California will continue to misgovern their states into ruin, confident that the states are too big to fail and will be bailed out by the rest of the country.
Leaving aside prudential questions, what would it mean legally for a state to go bankrupt (or whatever would be the appropriate term)?
Does there already exist a mechanism–like the bankruptcy courts for individuals and corporations–for dealing with it?
If not, what might a salutory federal law look like–some shot across the bow making it likely that bail-outs will not be forthcoming? Presumably (unfortunately) the only liability destructive officeholders face is that of being voted out of office.
Here are three questions, each of which deserves an extensive answer, which I don’t think that I can supply with sufficient fullness. But here are some hints along the way.
(photo credit: maistora)