Rep. Eric Cantor: 'No bailout of the states'

[WestVirginiaRebel]

The Hill:

House Majority Leader Eric Cantor (R-Va.) issued a new threat against a federal bailout for ailing state governments Monday as GOP leaders girded for a confrontation with President Obama over spending.

Heading into Tuesday’s State of the Union address, Cantor showed no desire for increases in virtually any area of the federal government, and he doubled down on his opposition to new proposed spending on infrastructure and education, even in areas, like transportation, where he acknowledged there were deficiencies.

Cantor flatly rejected any changes in the law that would allow state governments struggling with record budget deficits brought on by the economic recession and rising pension costs to restructure debt, including allowing them to declare bankruptcy.

“I don’t think that that is necessary, because state governments have at their disposal the requisite tools to address their fiscal ills,” the majority leader said, before going a step further.

“I think some ... have mentioned this Chapter 9 equivalent for states is somehow going to stave off some kind of federal bailout — we don’t need that to stave off a federal bailout. There will be no bailout of the states,” Cantor said. “States can deal with this and have the ability to do so on their own.”

The stark remarks set up a State of the Union in which heightened attempts at presenting a tone of civility between the parties will mask sharp differences across the board on policy. Hours before Obama is to speak at 9 p.m., House Republicans plan to approve a resolution instructing the chairman of the House Budget Committee, Rep. Paul Ryan (R-Wis.), to set spending at the level it stood at in 2008 or less. Ryan will also deliver the official GOP response to Obama’s speech.
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Sorry, California-you're on your own.

[ErnstBlofeld]

Can a State Declare Bankruptcy? The answer is "No". Chapter 9 of the U.S. bankruptcy code allows individuals and municipalities (cities, towns, villages, etc.) to declare bankruptcy. But that doesn't include states. (It can default on their loans.