State Bailouts Would End Federalism

I am really concerned about the growing talk suggesting that Republicans are willing to cut a deal with Democrats over state bailouts for badly run states, perhaps in exchange for something like a payroll tax holiday or cut.  

Breitbart had a good article last week on this issue.  Changing the law to allow states to use the federal bankruptcy laws would destroy what’s left of their sovereignty and make a mockery of federalism by turning the states into vassals of the federal government.  

Even if states agree to allow their bondholders to sue them in federal court by suspending their sovereign immunity in exchange for access to federal bankruptcy court, that wouldn’t solve the problem for two reasons:  (1) the bondholders would then find themselves behind everyone else in a bankruptcy proceeding.  (2)  it demonstrates a lack of understanding of the most fundamental structures of our constitution, and of our bankruptcy laws.  

Our bankruptcy laws are one of many concepts invented by our Founders.  They protect individuals from being thrown in jail for debt.  They give individuals a second chance.  They are based in individual, not collective, rights and freedoms.  

Should we enable the third-world countries of California, Illinois, and other Democrat-run states access to federal bankruptcy protections, it would not only make a mockery of the structure of our government–federal, state, people–and their relationships to each other, but it would be one of the best examples of the slippery slope at work ever seen.  (It worked out “okay” for cities to do it, so why not states?)

Besides, I’m ticked because I don’t want taxpayers in Texas and Indiana paying for Democrats to destroy the economies in the states they run.  Preventing them from defaulting on their debt isn’t compassionate:  it’s immoral.