Posted on 06/21/2017 10:56:05 AM PDT by Be Careful
States face colossal fiscal pressures, including mounting public pension obligations that now represent a $1 trillion unfunded gap, according to the Pew Center on the States. That gap—combined with other mounting fiscal woes—has led to a national conversation about whether states should be allowed to file for bankruptcy. That conversation has prompted state officials to react, most arguing that the mere existence of a federal law allowing states to declare bankruptcy would increase interest rates, rattle investors, raise the costs of state government, create more volatility in financial markets, and erode state sovereignty under the 10th Amendment to the U.S. Constitution. To help explain this complicated issue, CSG asked Kenneth Katkin, a law professor at the Salmon P. Chase College of Law at Northern Kentucky University, a few questions about bankruptcy and states.
Why can’t states use the federal bankruptcy system to reorganize their debt? “There are two reasons why state governments currently cannot use the federal bankruptcy system to reorganize their debt. First, the federal bankruptcy code does not allow—and has never allowed—state governments to declare bankruptcy. Since 1937, the bankruptcy code has allowed ‘municipalities’ to declare bankruptcy. The term ‘municipality’ is defined in the bankruptcy code as a ‘political subdivision or public agency or instrumentality of a state.’ This definition is broad enough to include cities, counties, townships, school districts and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities and gas authorities. But it does not include state governments.
“The second reason stems from the U.S. Constitution. The contracts clause of the U.S. Constitution prohibits state governments from ‘impairing the obligation of contracts.’ As originally understood and enforced, this clause prohibited state legislatures from passing any laws to relieve either private debt or the state government's own debt. Beginning in 1934, however, the Supreme Court began to interpret the contracts clause more flexibly and not as an absolute bar to state debt relief laws. Even under the flexible modern approach, however, the Supreme Court in 1977 reiterated that ‘a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money (on something else.)’ Thus, were Congress to amend the federal bankruptcy code to authorize states to repudiate debt, the Supreme Court would then need to decide the novel constitutional question of whether such debt repudiation would nonetheless violate the contracts clause of Article I, Section 10.”
What benefits would allowing states to file for bankruptcy provide? “Bankruptcy is designed to give a ‘fresh start’ to debtors who enjoy no reasonable prospect of satisfying their financial obligations. It is difficult to predict all the consequences that would follow a state government's voluntary entry into bankruptcy. Clearly, state governments that pursue voluntary bankruptcy would seek relief from certain debt obligations, particularly pension debt now owed to retired state employees and interest payments now owed to holders of state bonds. In bankruptcy, state governments also might seek relief from contract debt owed to vendors and contractors that have done business with the state. A federal bankruptcy court has the power to grant all such relief.
Like private parties who declare bankruptcy, a state government that declared bankruptcy would find it more difficult and more expensive to obtain credit in the future. Vendors would be justifiably hesitant to conduct business with the state unless they were paid in full for their work, in advance. Morale within the state government's career work force could be expected to suffer. And although state legislators presumably would recoil at the loss of state government buildings or state parks or state vehicles to foreclosure, liquidation of some components of a bankrupt's estate to satisfy creditors is an ordinary incident of bankruptcy.”
What steps would the federal government have to take to allow for state bankruptcy? “To allow for state bankruptcy, Congress would need to amend the federal bankruptcy code to add state governments to the list of entities who may apply for bankruptcy. In addition, a state would need to amend its own state laws to authorize it to make application for federal bankruptcy. Finally, the United States Supreme Court would need to rule on whether the contracts clause of Article I, Section 10 of the United States Constitution prohibits states from declaring bankruptcy even if authorized to do so by Congress, or imposes any restrictions on the terms, conditions or circumstances under which state governments might declare bankruptcy. If it chose to do so, Congress could require the Supreme Court to rule expeditiously on these questions.”
Kenneth Katkin teaches and writes in the areas of constitutional law, communications law, legislation, federal jurisdiction and entertainment law at the Salmon P. Chase College of Law at Northern Kentucky University. He received his law degree from the Northwestern University School of Law.
Hell, no. You voters put these clowns into office and let them buy votes using future income, so the piper’s here to get paid. You might also suggest that your elected officials cut current spending significantly.
Calif has plenty of money. We regulate cow farts and provide billions in services to illegal aliens. We’re number 50 in infrastructure needs and no one is worried. We are spending over 80 billion on a high speed train. So what’s the problem. If we were really strapped, we wouldn’t be doing these things would we?
And of course pension “experts” that assumed the stock market would go up on average 10% a year forever.
I would like to see States be able to go bankrupt due to their corruption and inability to be fiscally responsible.
With the following condition:
All debts and contracts will be null and void.
The State will be immediately turned into a territory. The State shall loose all Senators and Congressmen and all representation in the Federal Government to include the right to vote in Federal Elections.
A Federal Governor will then be appointed to run the State under Federal Receivership. He/She will be able to make all decisions until that time as the territory will be admitted back into the union with a positive financial history.
“Since 1937, the bankruptcy code has allowed ‘municipalities’ to declare bankruptcy. The term ‘municipality’ is defined in the bankruptcy code as a ‘political subdivision or public agency or instrumentality of a state.’ This definition is broad enough to include cities, counties, townships, school districts and public improvement districts. “
So, the Democrats will proceed thusly:
1) Create a bunch of new “improvement districts” and other entities that could be considered as “municipalities”.
2) Have those assume the bulk of the state’s debt.
3) Have those municipal sub-entities declare bankruptcy while the state starts fresh.
My God, I’m starting to think like a corrupt Democrat lawyer!
Post #5-
That sounds like Mueller’s mandate, as provided by Czar Rosenstein.
As a side note to this thread, please consider the following.
As mentioned in related threads, if the states would support Trump in putting a stop to unconstitutional federal taxes, taxes that uniparty lawmakers cannot justify under Congress’s constitutional Article I, Section 8-limited powers, then the following would probably happen imo.
The states would probably find a tsunami of new state revenues (higher state taxes) that the states wouldn’t know what to do with, establishing their own healthcare programs, improving public education, increasing funding for police and fire department, fixing infrastructure for starters.
“Congress is not empowered to tax for those purposes which are within the exclusive province of the States.” —Justice John Marshall, Gibbons v. Ogden, 1824.
”From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added].” —United States v. Butler, 1936.
Drain the swamp! Drain the swamp!
Remember in November ’18 !
Since Trump entered the ’16 presidential race too late for patriots to make sure that there were state sovereignty-respecting candidates on the primary ballots, patriots need make sure that such candidates are on the ’18 primary ballots so that they can be elected to support Trump in draining the unconstitutionally big federal government swamp.
Such a Congress will also be able to finish draining the swamp with respect to getting the remaining state sovereignty-ignoring, activist Supreme Court justices off of the bench.
In fact, if Justice Gorsuch turns out to be a liberal Trojan Horse then we will need 67 patriot senators to remove a House-impeached Gorsuch from office.
Noting that the primaries start in Iowa and New Hampshire in February ‘18, patriots need to challenge candidates for federal office in the following way.
While I Googled the primary information above concerning Iowa and New Hampshire, FReeper iowamark brought to my attention that the February primaries for these states apply only to presidential election years. And after doing some more scratching, since primary dates for most states for 2018 elections probably haven’t been uploaded at this time (March 14, 2017), FReepers will need to find out primary dates from sources and / or websites in their own states.
Patriots need to qualify candidates by asking them why the Founding States made the Constitution’s Section 8 of Article I; to limit (cripple) the federal government’s powers.
Patriots also need to find candidates that are knowledgeable of the Supreme Court's clarifications of the federal government’s limited powers listed above.
From the famous Daily News headline:"Ford to NYC:Drop Dead"
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