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Bankruptcy for States, or a Fix by Politicians? Gingrich Repair through Bankruptcy vs. Gov. Rick Scott Spending Reduction

By Joseph McDaniel, Esq.

John Keefe, on CBS MoneyWatch.com, has written an article about why it's a terrible idea for States to be permitted to file Bankruptcy.

One thing I liked about the article was his observation that the excessive spending had to be fixed, and John Keefe and I certainly agree on that point.

He has a philosophical preference for a fix engineered by politicians, not U.S. Bankruptcy Judges, and there's nothing wrong with that preference.

And I'm pretty easy either way, as long as the problem gets fixed. So far, I haven't seen a lot of fixing; but the Governor of Georgia, Rick Scott, has announced deep budget cuts very recently, as reported in Florida Today.

If he can get them enacted, and Florida rebounds (or at least doesn't need new bailouts), that will provide one sort of template for the other insolvent States.

It will be interesting to see if other States can get their checkbooks balanced, or whether bankruptcy is the only possible option for them, because their politicians can't bring themselves to stop spending.

I'm pretty easy; if politicians don't have the brains to spend less than the States bring in, we can either put up with infinite tax increases or inflation from printing presses (at the Federal Level), or we can permit Bankruptcy Judges to do the heavy lifting that politicians are afraid to...lift!

And just so you know, Bankruptcy Judges are generally pretty well acquainted with the decision-making process. Every day of the week.

Full post as published by Arizona Bankruptcy Attorney Blog on February 08, 2011 (boomark / email).