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At AEI on Thursday, legal experts debated the place for and feasibility of a federal bankruptcy statute that would enable American states to restructure and resolve unsustainable debts. David Skeel of the University of Pennsylvania Law School painted the statute as a viable and preferable alternative to default, comparing states to the many individuals who deem bankruptcy an appropriate option. For Skeel, the bankruptcy law would likely encourage renegotiation between state employees and state decision makers and result in needed restructuring of state bond and pension systems.
Damon Silvers of AFL-CIO disagreed with Skeel, noting that federal fiscal structures dictate states' responsibilities without providing funds to carry them out, and are partially to blame for high state debts. Silvers likewise contended that a state bankruptcy law would enable avoidance of these more systematic problems rather than solve them.
E.J. McMahon of the Manhattan Institute described specific states that have neared default, arguing that in the face of default, state politicians will do what is necessary to bring their states out of crisis. McMahon concluded by emphasizing the potential dangers of such a mandate, including weakening state sovereignty and the international implications of a major US city filing for bankruptcy.
Extraordinary and sometimes crippling levels of debt have plagued American states in recent years. State officials are often bound by inherited obligations to their citizens and employees and frequently lack the resources to meet those demands. David A. Skeel Jr., a University of Pennsylvania law professor, suggests an innovative solution to the issue: enacting a bankruptcy law for states to restructure and resolve unsustainable state debts.
Critics, however, raise a number of concerns: Could a state bankruptcy impair bond markets? Is this an attempt to evade pension obligations to public employees? Would subjecting state finances to federal trustee supervision violate state sovereignty and principles of federalism?
Join the Federalist Society and AEI in this vigorous debate growing out of “When States Go Broke: The Origins, Context, and Solutions for the American States in Fiscal Crisis,” a just-released collection of essays edited by Skeel and Peter Conti-Brown.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Lee Liberman Otis, Federalist Society
David A. Skeel Jr., University of Pennsylvania Law School
Michael S. Greve, George Mason University School of Law and AEI
E.J. McMahon, Manhattan Institute
Damon Silvers, AFL-CIO
Question and Answer Session
Michael S. Greve, George Mason University School of Law and AEI
For more information, please contact Brad Wassink at email@example.com, 202.862.7197.
For media inquiries, please contact MediaServices@aei.org or 202.862.5829.
Michael S. Greve is a professor at George Mason University School of Law. From 2000 to 2012, Greve was the John G. Searle Scholar at AEI and specialized in constitutional law, courts, and business regulation. His most recent book, “The Upside-Down Constitution” (Harvard University Press, 2012), is available for purchase on Amazon.com. Greve is also the chairman of the Competitive Enterprise Institute. He is a frequent contributor to the Liberty Law Blog, and he will be a full-time professor at George Mason University beginning in the fall of 2012. Before his engagement at AEI, Greve founded and co-directed the Center for Individual Rights, a public interest law firm specializing in high-stakes constitutional litigation.
Lee Liberman Otis is the senior vice president and faculty division director at the Federalist Society. Otis clerked for Judge Antonin Scalia of the US Court of Appeals, served as a special assistant at the US Department of Justice under Attorneys General William French Smith and Edwin Meese, and returned to clerk for Justice Scalia after his appointment to the US Supreme Court. Otis then joined George Mason University School of Law as an assistant professor, where she taught Constitutional Law, Federal Courts, Appellate Advocacy, and Legislation. She went on to serve as associate counsel to President George H.W. Bush, to practice appellate litigation at the Washington, DC, office of Jones, Day, Reavis and Pogue, and to serve as chief counsel to the Immigration Subcommittee of the Senate Judiciary Committee, general counsel of the US Department of Energy, and, most recently as associate deputy attorney general at the Department of Justice.
E. J. McMahon is a senior fellow at the Manhattan Institute and its Albany-based Empire Center for New York State Policy. He writes on regional, state, and local issues, recommending policy changes and reforms to increase economic growth. His recent work has included studies focused on New York's unsustainable public pension and retiree health care costs, the migration of New York residents to other states, and a "blueprint" for cutting and restructuring New York's deficit-ridden state budget. McMahon's professional background includes more than 25 years as an Albany-based policy analyst and close observer of New York State government, working in both the private and public sectors. He served as deputy commissioner for tax policy analysis and counselor to the commissioner in the New York State Department of Taxation and Finance, director of minority staff for the New York State Assembly Ways and Means Committee, vice chancellor for external relations at the State University of New York, and director of research for the Public Policy Institute, which is the research arm of the Business Council of New York State. Earlier in his career, he was a staff writer and columnist for newspapers including the Albany Times Union and The Knickerbocker News.
Henry Olsen, a lawyer by training, is the director of AEI's National Research Initiative. In that capacity, he identifies leading academics and public intellectuals who work in an aspect of domestic public policy and recruits them to visit or write for AEI. Olsen studies and writes about the policy and political implications of long-term trends in social, economic, and political thought.
Damon A. Silvers is an associate general counsel for the AFL-CIO. Silvers’s responsibilities include corporate governance, pension, and general business law issues. He led the AFL-CIO legal team that won severance payments for laid-off Enron and WorldCom workers. He has also testified before numerous congressional committees on issues arising from the collapse of Enron. Silvers is also counsel to the chairman of ULLICO Inc., where he has assisted a new management team in addressing a business crisis arising out of serious misconduct by prior management. Before working for the AFL-CIO, Silvers was a law clerk at the Delaware Court of Chancery for Chancellor William T. Allen and Vice-Chancellor Bernard Balick. He has also been the assistant director of the Office of Corporate and Financial Affairs for the Amalgamated Clothing and Textile Workers Union, and the research director for the Harvard Union of Clerical and Technical Workers of the American Federation of State, County and Municipal Employees.
David A. Skeel Jr. is the S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Law School. He is the author of “The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences” (John Wiley & Sons, 2011), “Icarus in the Boardroom” (Oxford Press, 2005), and “Debt’s Dominion: A History of Bankruptcy Law in America” (Princeton University Press, 2001), as well as numerous articles and other publications. He has been interviewed on the News Hour, Nightline, Chris Matthews’s Hardball, National Public Radio, and Marketplace, among others, and has been quoted in The New York Times, The Wall Street Journal, The Washington Post, and other newspapers and magazines. Skeel has received the Harvey Levin Award three times for outstanding teaching, the Robert A. Gorman Award for excellence in upper-level course teaching, and the University of Pennsylvania’s Lindback Award for distinguished teaching. In addition to bankruptcy and corporate law, Skeel also writes on sovereign debt, Christianity and law, and poetry and the law, and is an elder at the Tenth Presbyterian Church in Philadelphia.