‘Too Big To Fail’ States

Abstract:     
This Symposium Essay explores the constitutional implications of a threatened default by a large state such as California. Much like the huge financial institutions that became distressed in 2008, a large state might be well be deemed too big to fail. If that kind of state sought a federal bailout, it would hold most of the cards in any negotiation because Congress lacks the power to compel a state to pay its debts. After outlining this hold-up issue, the Essay concludes by assessing some possible responses by Congress, such as invoking the Guarantee Clause or imposing future fiscal penalties under the Spending Clause.

Number of Pages in PDF File: 7

Accepted Paper Series