Federal debt for States' bailout will dry up after, "Moody's warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Obama's tax and unemployment benefit package becomes law." There is no hope for NY or California or Illinois or Michigan except for a Federal Bailout or bankruptcy. But there's no Federal bankruptcy law applicable to the States. (See this link for more details)
Since Congress will be reluctant to bailout States (where would it end?), we need a new Bankruptcy Chapter for State Bankruptcy to be called Chapter 10. Since States are sovereign entities and as such retain sovereign powers, Congress can simply make modifications to the present Chapter 9 for municipalities to create a United States Code Title 11 Bankruptcy Chapter 10 for States.
I've copied sections of the Federal Bankruptcy law for Chapter 9 and would remove text in blue and insert the red text. Other parts of this Chapter 9 would remain unchanged and be renumbered from §§
TITLE 11 CHAPTER
SUBCHAPTER I—GENERAL PROVISIONS (§§
SUBCHAPTER II—ADMINISTRATION (§§
SUBCHAPTER III—THE PLAN (§§
This chapter does not limit or impair the power of a State to control, by legislation or otherwise,
Notwithstanding any power of the court, unless the debtor consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with—any of the political or governmental powers of the debtor State; the debtor’s use or enjoyment of any income-producing property; the sovereign immunity of such debtor State.
(b)The chief judge of the court of appeals for the circuit embracing the
If the petition is not dismissed under subsection (c) of this section, the court shall order relief under this chapter notwithstanding section (b)The court may not, on account of an appeal from an order for relief, delay any proceeding under this chapter in the case in which the appeal is being taken; nor shall any court order a stay of such proceeding pending such appeal. The reversal on appeal of a finding of jurisdiction does not affect the validity of any debt incurred that is authorized by the court under section (c)or (d)
The holder of a claim payable solely from special revenues of the
To be sent to various Congressmen, Senators, Moody's and others who may be interested in a non-bailout of States.