State bankruptcy is a stupid idea 💰

Imagine that you own a business where it’s always possible to get more revenue. Your products are so essential that people will pay any price you charge them, if they fail to pay the price you have the right and police power to seize their property or incarcerate non payers. That’s the role of government.

The US Constitution prohibits the courts and legislatures from impeding government contracts made with business – so implementing payment plans or writing off loans isn’t an option with the state bankruptcy. A state bankruptcy would allow courts mandate that states raise taxes or cut services without democratic input but they can’t get rid of historical debts.

Ultimately, what government taxes and spends should be a political question, decided by elected officials. If you want to offer a service, the government should raise revenue to cover the costs of the service. It shouldn’t be set down by an unelected court. Coronavirus has mostly impacted wealthy states – they can afford to tax more (if that’s their choice) to make ends meet.