The procedure would let the states help themselves, giving governors and legislatures a third way out of their financial mess. Raise taxes, cut spending or … alter union contracts. Each state would face the choice of whether to wallow in overspending or take steps to correct it.
Initially, Democrats will oppose the idea of state bankruptcies. But when House Republicans make clear that no more aid will be forthcoming and that the stimulus spigot is turned off, at least some Democrats will realize this is their best option.
Then, fiscal necessity will have achieved what so many of us want — a return of true local government.
No more will schools be run for the teachers and by the teachers — nor will such unions as the Service Employees International Union and the American Federation of State, County and Municipal Employees dominate state legislatures. School choice, charter schools and even voucher programs will have a chance to flourish.
Some fear the U.S. Constitution prevents federal law from extending Chapter 9 to permit state bankruptcies because it would violate state sovereignty. Yet Chapter 9 is voluntary, so states would remain sovereign — with merely the option of subjecting themselves to Chapter 9 constraints.
Giving insolvent states the power to break their union contracts would alter dramatically the balance of political power all across the nation. No longer would municipal unions have the financial ability to underwrite the Democratic Party. Gone from our politics would be $200 million that the American Federation of Teachers, the National Education Association, SEIU and AFSCME together spent on political action in the last election cycle.
Government would be returned to the people.
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