In the last two years, 15 municipalities have sought bankruptcy protection. Their financial woes were partly fueled by pay and benefit packages, particularly pension benefits, of their unionized employees. Although bankrupt municipalities in Michigan may not seem to be a problem for a rancher in Oklahoma, if the federal government steps in to create another tax-funded bailout, the connection becomes direct. California has already come begging to Congress, and thankfully the 111th cohort said “no.” There currently exists no provision for states to declare bankruptcy, and this may force Congress’ hand to drain taxpayer pockets for more “bailouts” unless some mechanism can be found to offer states a way out.
