State bankruptcy is a long standing topic in bankruptcy reform, just as the EU is experiencing the problems of the catholic periphery vs the protestant core.
It’s not a constitutional issue, b/c it’s one of the most important reasons for the formation of the federal system: unifying bankruptcy laws so interstate commerce and consequent scale was possible without continuous conflicts that constrained trade.
Opponents would resist under the Contracts Clause but the court would eventually extend protection to the states since the states are not making the legal change, the federal government is, and despite the 10th (which is universally ignored anyway), the bankruptcy code is a power specifically granted to the federal government specifically for this reason.
Add to the fact that it was done by false promise of ‘progressive’ (((socialist))) eternal growth on one end and financial (((rent seeking))) constructed using fractional reserves guaranteed by the federal government, and the credit expansion, all via the treasury and federal reserve, instead of retaining the returns for redistribution to the citizenry, and we have criminal conspiracy at least of conspiracy of interests not sufficiently defended against by a government lacking experience in financial corruption practiced in the Pale – especially ukraine and russia. (Where mises and rothbard inherited their ideas and tried to spread them to the west.)
While screwing politicians, government employees, their unions, and investors that profited from seeking rents by offering credit that baits states into hazard, the populations of the states would benefit greatly from no longer spending their tax revenues on employee pensions as large as their medicare-medicaid expenses, leaving a single digit trickle of income for infrastructure and investment.
Personally I would love to write a brief for the court on this, and bring the issue before the court because it would provide the impetus to end the fed, and nationalize the finance sector dependent upon treasury issue, and instead, force them to raise all capital from the private sector, forcing the sector to compete for savings rather than continuously destroy them.
Biggest organized crime in human history.