U.S. Treasury bonds are declining in value, as investors recognize the long-term debt implications of more deficit spending to pay for the just-passed health care reform.

State bankruptcy must serve to break the stranglehold of public-sector unions over state politics and budgets; help restore the federal government's precommitment against bailing out states; and advance, rather than distract from, the far more fundamental federalism reforms that will be required over the coming years.

The states' fiscal crisis is structural, not cyclical. Real recovery and reform will require drastic changes to our federal architecture.