Bankrupt US States: Why Not Secede?

by Russell D. Longcore

Many of the states in the USA are effectively bankrupt. The US Constitution does not make any provision for states to declare bankruptcy and reorganize. Nor should it. That little eventuality could be considered a Tenth Amendment issue, since all powers not delegated to USA are reserved to the states and to the people.

The states in the worst financial condition are states that have most closely mimicked Washington: Illinois, New York, Connecticut, California and New Jersey…the bluest of the blue states. They have the strongest unions and greater desires for public programs…just like DC. There are 23 states that are effectively “underwater”…that’s nearly half the country.

Click HERE to see a slideshow of the eleven states most likely to go bankrupt soon.

The sick states are required by their own constitutions to balance their annual budgets. Many have not. California has not seen a balanced budget for years. And when I say “balanced budget,” I’m not talking about a state that zeroes out its balance sheet with massive borrowing. I’m talking about operating within the strictures of the state’s tax income and nothing else.

I have read recent articles that float the idea that Washington will soon offer a Federal bailout for certain states that DC considers “too big to fail.” But is that the proper remedy? Doesn’t a bailout simply kick the can down the road? A stimulus or bail out merely ignores the underlying cause of the disease…too much spending. Every person who balances a checkbook can clearly diagnose the illness.

Unfunded Federal mandates directly affect the budgets of states. The Clean Air Act and the Clean Water Act required programs to be done by the states with no Federal funding. Another example is the Emergency Medical Treatment and Active Labor Act that require nearly all American emergency rooms to accept any patient regardless of the patient’s ability to pay, but do not provide adequate reimbursement. And there are many more.

But remember…Washington takes the tax money from the states for all manner of do-gooder unconstitutional social engineering programs, and then sends a portion of it back to the states with all kinds of strings attached.

Also remember the challenge I have thrown out many, many times…for any person to give me just ONE benefit that any American state enjoys as a direct result of its inclusion in the United States of America. (I’m still waiting.) I contend that there is no benefit whatsoever for any state to continue in the so-called “Union.”

So if the cost for remaining a state is so high that it bankrupts you…and there is no perceivable benefit for remaining a state…WHY THE HELL STAY??

The best, most logical solution for the financial health of any American state is for it to secede from the Union. At the very moment of secession, all ties to Washington cease. All of the money that Washington takes from the state’s taxpayers stays in that state. All of the US national debt is repudiated by the citizens of that seceding state. All of the unfunded mandates disappear. All of the thousands of pages of regulation handed down over the past few decades vanishes. All of the Federal Court and Supreme Court rulings become null and void. It’s like being released from prison, stepping outside the gates and taking a deep breath of the air that other free men breathe.

Think about what would happen in California if the Federal income tax revenue did not leave the state? I’m not suggesting that it should go to Sacramento. But that gigantic amount of money staying in California would instantly increase the financial health of all individuals and businesses in The Golden State. Visualize a paycheck without Federal deductions…aaaaahhhhh!

Every State has its own constitution. Some states might have to rewrite or revise their constitution to reflect the needs of a nation. Most American states were not sovereign nations when formed, but territories that were granted statehood by acts of Congress. These states may need a new constitution.

As we all know, each seceding state would have to create a monetary system and re-create its militia. But that’s how sovereign nations have always operated.

Dear Readers, state secession solves every problem associated with or created by Washington. In addition, it creates a smaller, more manageable unit of government more closely aligned to the people it serves. And don’t forget that a republic form of government is supposed to protect property rights and individual rights. Everything else should be done by the people themselves. Yes, even police, fire, roads and courts. The free market can do it better than government.

Knowing all of these positives about secession, and knowing all the negatives about remaining a US state, why is secession not openly discussed as a viable solution for any American state? If it’s good enough for South Sudan, it’s certainly good enough for an American state.

Secession is the only hope for mankind. Who will be first?

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

9 Responses to Bankrupt US States: Why Not Secede?

  1. […] Russell Longcore: Bankrupt US States: Why Not Secede? […]

  2. Kelly says:

    It should be expected that the many small states banding together will produce a subject that is larger than the sum of the small parts.

    To a good degree that has worked. What has not worked is the principle that an area should work and produce goods and services that are positively economic to an area, prior to exportation of those goods or services.

    Even worse is the outsourcing to foreign lands, of all kinds of manufacture, and service sector, to the affect that rather than export goods and services, these are now imported and the unemployed have a severe affect on the whole economy of state and USA.

    It is all well and good for the mega rich trying to avoid taxation;
    it is their effort that caused the exodus of work in the first case, and their fault that taxes keep increasing because of poor productivity of the USA.

    Let us assume a particular state attempted to become independent. It would not be fair for the rest of the US States to fund the infrastructure of an independent state. Taxes would have to change, likely increasing, if produce and goods are to be imported, exported or traversed via the newly independent state.

    There may be terms written in State Constitutions that legally binds a state to the Union, with financial liabilities and other penalties if it were to break away.

    There is every likelihood that trade embargoes would be put onto such an attempt to coerce a return to Union.

    • dumpdc says:


      Where has it worked where many small states banded together? The outsourcing is a function of government regulation and interference, not any other reason. You’re right…it is well and good that the mega rich try to avoid taxation…we all should do the same. You’re an idiot to blame the rich for jobs exodus…look to DC’s over-regulation and taxation. And your comment about “fairness” sounds like a second-grader crying to the teacher. What’s fair is hard money and liberty. You’re suggesting that no state should secede because the rest of the states would have to take up the slack. No they wouldn’t. They should secede too. And embargoes? That might happen, but that’s an act of war. Russ

      • Kelly says:

        Thanks for debating Russ.

        Where has it worked where many small states banded together?
        YOU (and me) are FREE due to the Union of American States, collectively battling against the tyranny of the USSR.

        It is VERY LIKELY, that USSR and Communism overall, may well not have been limited to the Asian Continent had it not been for the joint effort of the Union and NATO.
        As was so evident by the Cuban Crisis, there would have probably been expansion into other areas of the globe and USA may have became part of USSR… by force if necessary.
        [It was in the mandate of USSR constitution. The Soviet government’s goal was to spread communism throughout the world, by force and violence if necessary].
        Single states would not have been able to endure.

        The strength, wealth and a steadfast people (Union of American States) was about the only power that could limit USSR expansionism. {With help from NATO European States too}.
        The problem with the Mega Rich verses the poor is that it becomes very uneven in the size of the populous. The poorest (most) eventually get disgruntled by the richest (fewest) and it ends up in Civil War. There is no differential between Aristocracy and Mega rich people who run a State or Country.

        While you may have separate views, I believe there is good in the basis of the Muslim Faith and that of Christianity. One of these basics is that of “humanity”. {Extremism and Extremists is NOT righteous/ness in either faith}.

        Unfortunately Capitalism has no part to play in ethics (humanity does not exist)… it is SOLELY business and PROFIT. The earth does not matter because it is the forgoing cost of winning the battle for financial gain. ANYTHING is sold for PROFIT…. even truth
        In a true Capitalistic world the money game continues until only one person has full control of everything. This is where the Capitalist system breaks down, because it in a finite point; where no money can be distributed and NO more PROFIT can be made. I would suggest that civil or world war would be waged long before that end game was accomplished.

        As regards an embargo, may I suggest you look at the difference in terms between an embargo and a blockade.
        A Blockade is an act of war NOT an embargo.
        In separatism, a singular state would be cutting itself off from the others. If the remainder of the Union get cheaper prices due to mass market bargain dealing.. why should the loner state profit from that? If trade agreements exist between affiliated states and the loner state exempts itself, there may be many things it was used to that become no longer available. For instance any nuclear capacities might have to be withdrawn / removed, on both military and civil industrial, installed by cooperative states.
        Now to the nitty gritty….
        The complaint you are making is the intrinsic quality of CAPITALISM.
        What is your PROBLEM?…… Money…..
        Where does it come from?….. Capitalistic European Bankers.
        The Central Federal Bank loans money it prints to the US Government.
        The US Government puts this debt onto Joe Taxpayer and then ALSO adds interest to it, to repay the Central Federal Bank.
        On what tangible asset are the new dollars made….NOTHING.
        Suppose they cost about $5 per 1000 to make…. an awful lot of profit for nothing [and it does get much worse than this because these banks only loan to one another and not to anyone else at VERY favourable rates].

        May I humbly suggest that a better world can only be had with equality and fairness.
        This is not Capitalism… Capitalism is what is presently defeating The United States of America.

        Kind regards.


  3. Kelly says:

    it is well and good that the mega rich try to avoid taxation…we all should do the same. You’re an idiot to blame the rich for jobs exodus…look to DC’s over-regulation and taxation.

    Capitalism does not care about workers… only Profit.
    Therefore any rich person will remove their business from USA to a foreign place where it is cheaper to manufacture goods or services.
    The nice thing is that Taxes are usually lower for them too… so the rich avoid paying taxes. Often they are paid benefits for opening a new factory.

    A normal office worker, shop keeper, bank worker or teller, builder,electrician, plumber etc. is unable to easily remove themselves to foreign places or outsource unless in a niche speciality.

    DC’s over-regulation and taxation is a symptom of jobsworth’s.
    A regulator, having made every regulation available, can not make himself redundant, so returns to writing more rules that become more and more worthless and entwined. They become so twisted that the final regulation must be “not to over regulate the regulated”.
    Government overspend and Taxation is a similar closed loop, if there is no investment and return of profit. The government taxes and spends more than it has: borrowing fills any gaps. The next year the income again falls short even though taxes have been increased because the spending gap does not get closed and interest payments have to be made on the borrowed monies.
    Borrowing money to get out of debt is no answer because of overspending governance and the rich abandoning US for richer pickings in Asia.

    Today many individual states are technically bankrupt… and the USA itself resting on these, intrinsically must be the same.

    This is capitalism… the rich will be richer the states will be penniless.

    • dumpdc says:

      Kelly- this will be the last word in our exchanges. The economic system presently in practice in America is not capitalism or the free market. It is mostly fascism. But You are entirely clueless about capitalism and the free market. Spend a lot of time in our Archives and at the Mises Institute website learning about the free market. Russ

  4. JerseyCynic says:

    EXCELLENT site!

    I just opened a FB page in hopes of getting some people to start paying attention and to TAKE IT LOCAL. I will put your site up


    (JerseyCynic over at blondesense)

  5. how do I post this on FB?

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