A Third Option Beyond State Bailouts and Bankruptcy

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Some states experiencing enlarged deficits due to Covid-19 are hoping for a bailout from Congress. Senate Majority Leader Mitch McConnell briefly suggests that state consider filling for bankruptcy as an alternative. Neither seems like a particularly attractive option, for a variety of reasons. But is there any alternative?

Professors John S. Baker Jr. and Robert T. Miller recently suggested a third option in the Wall Street Journal, and it’s not default. Perhaps counter-intuitively, they suggest the best approach for many states may be “more borrowing”–albeit with contractual provisions that will make investors more willing to lenf. They write:

States can put

Read more    Source: reason.com

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