Some fear the U.S. Constitution prevents federal law from extending Chapter 9 to permit state bankruptcies because it would violate state sovereignty. Yet Chapter 9 is voluntary, so states would remain sovereign -- with merely the option of subjecting themselves to Chapter 9 constraints.
Giving insolvent states the power to break their union contracts would alter dramatically the balance of political power all across the nation. No longer would municipal unions have the financial ability to underwrite the Democratic Party. Gone from our politics would be $200 million that the American Federation of Teachers, the National Education Association, SEIU and AFSCME together spent on political action in the last election cycle.
Government would be returned to the people.