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Bankruptcy For Insolvent States Still a Possibility: The B Word Still Lurks!

By Joseph McDaniel, Esq.

I recently read an article that tells me that Gingrich and Jeb Bush favor permitting States to file bankruptcy.

Now, I don't have time to keep up with politics, but my guess is that if Gingrich and Jeb Bush are for it, a buncha guys on the other side of the aisle are against it.

Because politics apparently works that way. 

But politicians who don't want to let States declare bankruptcy have a difficult series of choices: they can ask for a bailout for the insolvent states, which ain't happenin' in today's climate, I think. Or if it does happen, it doesn't matter, because a person or a state can always spend more than they have if they can get away with it, and the states will be insolvent again twenty minutes after the bailout.

Because a politician can resist anything but temptation.

I'm a little surprised that Newt and Jeb are in favor of The B Word for States.

I would have expected them to favor the spectacle of States going to the House, hat in hand, and begging for a just a half a trillion or so. Pretty please with sugar on it.

And being asked to leave, empty-handed, by the servant's entrance in the back.

The B Word would save some politicians from that public humiliation.

It also saves some politicians from the exciting prospect of just walking out to the balcony and announcing that the cupboard is bare, and that the promises they made to take away other people's money and give it away didn't come to fruition. Because the people from whom they were gonna take are either on unemployment, or have left the beautiful state to escape being squeezed like a washcloth.

Not a Pretty, Pretty Prospect!

It also saves politicians from the prospect of actually making decisions as to which ox gets gored. Because whenever the trough gets taken away, somebody gets really cranky, and votes that crankiness.

In fact, for a few cynical minutes, it seemed to me that somebody might be playing "please don't throw me in the brier patch", and protesting against using the B Word, but secretly praying that such a measure passed.

But maybe that's just me being cynical.

Full post as published by Arizona Bankruptcy Attorney Blog on January 27, 2011 (boomark / email).