January 21st, 2011

might some states default?

Reuters is running stories about Gingrich saying Republicans in the House maybe will put together a way for states to declare bankruptcy. This is well within the idea of starving government of revenues so as to put pressure on spending. In any event, the Colbert Report had Christine Todd Whitman on to discuss related matters. Stephen: Will they default? Christine: I don't think so. Stephen: Have they ever defaulted? Christine: I don't think so.

Huge bells go off at this point and I haven't made it further in the show (it's tivo'd). Wait, what about that whole canal thing? A little -- a _very_ little digging turned up the WSJ article from Jan 4 of this year. Wow. Inexcusable for Whitman to be saying she didn't think states had ever defaulted if the WSJ covered 8 states and the whatever Florida was at the time defaulting in 1841 (mind you, without listing the states that did so, or, as near as I can tell, sourcing their information).

Their information would appear to come from this article at the University of Maryland, by Professor John J. Wallis, whose work can be found here:

http://econweb.umd.edu/~wallis/Research.htm

Specifically, "Sovereign Default and Repudiation: The Emerging-Market Debt Crisis in U.S. States, 1839-1843", 2004; there's a pdf link partway down. There's no indication that this was ever published anywhere or has been peer reviewed. There are aspects to the paper that do not inspire confidence in me, but I say that about a lot of stuff.

In any event, it would seem to be the case that states _have_ defaulted before (and more than defaulted: repudiated the debt either entirely or in part). Why should I have confidence in what Whitman says, if she says she doesn't think it will happen and she doesn't think it has ever happened -- and it has happened?

Mind you, I _don't_ think it will happen, but just for kicks, let's recall this, which can be found in her wikipedia entry:

"plaintiffs in the suit allege that Whitman is at fault for saying that the downtown New York air was safe in the aftermath of the attacks. In April 2008, the United States Court of Appeals for the Second Circuit overruled the district court, holding that as EPA head Whitman could not be held liable for saying to World Trade Center area residents that the air was safe for breathing after the buildings collapse. The court said that Whitman had based her information on contradictory information and statements from President Bush."

I used to adore Whitman. She's tall. She's articulate. I thought she had a real shot at being the first woman president. I am now _so_ glad that I was never confronted with the choice of a male Democratic candidate and Whitman running as a Republican for president. I might ultimately have found her as impossible to listen to as I did That Asshole she served under.