Should States Be Allowed To Declare Bankruptcy In 2011
A chorus of conservative pundits are calling for bankruptcy laws to be changed so that all 50 US state governments might have the chance to restructure their debts, an ability currently limited to corporations, municipal entities, and private citizens. Allowing states to declare for bankruptcy would create a “fair, orderly, predictable and lawful approach,” to aiding cash-strapped state governments around the country, former Florida Gov. Jeb Bush and ex-House Speaker Newt Gingrich urged in an op-ed Thursday. (Remind me again why we should care what these two have to say??)
From redalert.wnd.com comes the following statistics:
"Last October, the Center on Budget and Policy Priorities reported that to balance their 2011 budgets, states had to address fiscal year 2011 gaps totaling an estimated $125 billion, or 19 percent of budgets in 46 states.
State tax revenues were 8.4 percent lower in fiscal year 2009 than in 2008, and an additional 3.1 percent lower in 2010, reflecting the worst recession since the 1930s.
"States will continue to struggle to find the revenue needed to support critical public services for a number of years, threatening hundreds of thousands of jobs," the Center reported.
The Center sees no diminishment in budget problems in 2012.
Already 39 states have projected budget gaps that are expected to total $112 billion for fiscal year 2012, a budget gap that is expected to grow to approximately $140 billion once all states have submitted their 2010 estimates. Even worse, the federal aid to the states provided by the February 2009 American Recovery and Reinvestment Act and to a smaller extent in the August 2010 jobs bill, estimated at $60 billion in 2011, is expected to decline to $6 billion in 2012.
"Taking all these factors into account, it is reasonable to expect that for 2012, shortfalls are likely to exceed $140 billion with only $6 billion in federal Recovery Act dollars remaining available," the report concluded."
So naturally my question is should those laws be changed to allow states to declare bankruptcy in 2011?