State bankruptcy and a heartland home-grown solution: Nebraska’s LB 515

By Bernie Quigley

For The Hill on 1/20/11

The New York Times reports today that policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers: “Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.”

But states are finding their own ways to save money. Last fall, the Nebraska Campaign for Liberty distributed copies of Tom Woods’ book Nullification to 44 of the 49 members of their legislature. They followed up with discussion with some other senators about the kind of things they’d like to see done and provided some “model legislation”—courtesy of the Tenth Amendment Center.

“We didn’t have great expectations, said Laura Ebke of Red State Eclectic. “We thought that perhaps we’d get a little bit of notice, establish ourselves as some sort of states’ rights/limited government presence, and maybe scope out which senators we might be able to work with on some issues.”

Then she got an e-mail from a Legislative Aide for one of her senators about a bill that was getting ready to be introduced. Here is a piece of it:

Sec. 3. (1) The Legislature declares that the federal Patient Protection and Affordable Care Act is not authorized by the Constitution of the United States and violates its true meaning and intent as given by the founders and ratifiers and is hereby declared to be invalid in this state, shall not be recognized by this state, is specifically rejected by this state, and shall be considered null and void and of no effect in this state.

Could be an interesting battle, said Ebke.

Governors are raising their voices as well.

Susan Molinari, journalist and member of the U.S. House of Representatives from New York for three terms told Connell McShane on Fox Business this past week that we will see a “bifurcation of states” between those which bring creative and responsible ways of handling their debt, and those that just raise taxes. New leaders, she says – presumably among governors - will rise from this. This will happen within the next 60 days, she said.

A “bifurcation of states”: consider the possibilities. Parker and Spitzer are not going to like this.