Conyers rejects move to allow states to delcare bankruptcy

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Rep. John Conyers (D-Detroit) said yesterday that a congressional proposal to allow states to declare bankruptcy is an attack on public employees and unions and counterproductive.

Speaking at House Judiciary Subcommittee hearing on the Role of Public Employee Pensions in Contributing to State Insolvency Conyers said that it is wrong to have states file for bankruptcy in order to get out of collective bargaining agreements and pension funding commitments.

“Let’s face it. This effort to have states file for bankruptcy is simply a blatant attack on public sector employees and unions,” Conyers said. “More than an attack on public employees and unions, if undertaken, states’ filing for bankruptcy would do more harm than good in compromising its bonds ratings, which could result in higher interest rates for municipal bonds and reduce states’ availability of credit. Now doesn’t Congress have more important concerns to deal with? Rather than wasting time on this proposal, we should be devoting our resources to the real problems Americans are facing, namely joblessness and home foreclosures.”

The state of Michigan has been ranked 27th most likely to file for bankruptcy.

The proposed bankruptcy rule change is drawing bipartisan opposition.

At the hearing yesterday Judiciary Committee Chairman Lamar Smith (R-TX) said he had constitutional and policy concerns with the idea.

Even if Congress could enact a state bankruptcy chapter, it is also highly unlikely that any state would ever take advantage of it. The National Governors Association and the National Conference of State Legislatures have announced that states do not want bankruptcy relief and would not use it.

States currently have ways to put their fiscal houses in order. Even the governors of traditionally union-friendly states already have taken steps to reduce state spending and reform their public employee pension systems.

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