Tuesday, July 14, 2015
What America Thinks: What If A State Goes Broke?
Puerto Rico says it’s broke and can’t pay its bills. While a city like Detroit can declare bankruptcy, states don’t have that option, and Puerto Rico, while technically a commonwealth, is in the same fix. But critics say bankruptcy's just another form of bailout that rewards bad fiscal behavior. We decided to find out what America thinks.
The bottom line? Just 21% of voters now believe a state should be allowed to file for bankruptcy if it is unable to pay its financial obligations. After Detroit filed for Chapter 9 bankruptcy in 2013, a high of 30% of Americans felt that way. That was up from 17% in early 2011 when Republican presidential candidate Newt Gingrich proposed giving states that legal right.
Presidential hopefuls Jeb Bush and Hillary Clinton have already called for legal changes that would allow jurisdictions within Puerto Rico to declare bankruptcy the way Detroit did. Look for wrangling in Congress over this.
No one in Congress is pushing yet for letting states declare bankruptcy, but the pressure is liable to increase in the years ahead with major states like Illinois, California and New York facing huge unfunded pension liability for public employees. In 2013, 55% of Americans thought it was likely some state would file for bankruptcy in the near future, and 52% thought it would be California.
For Rasmussen Reports, I’m Alex Boyer. Remember, if it’s in the news, it’s in our polls.