State Bankruptcy Debate Continues

Since individuals and businesses are filing for bankruptcy right and left these days, it may not come as a surprise that states now want the option to file as well. This is the latest topic of debate on the Senate floor that is getting more than one Senator riled up.

Those in favor of the idea argue that cash-strapped states would benefit from filing for bankruptcy, allowing them to reorganize their finances and free them from any union obligations. Some Republicans, like Jeb Bush and Newt Gingrich, are fully in favor of this proposition.

In a Los Angeles Times op-ed piece last week, Bush went on to say that "In such a reorganization, a state could propose to terminate some, all or none of it's government employee union contracts and establish new compensation rates." He blames large pay and benefits packages that were promised to government employee unions for preventing states from improving their financial status.

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