- - Tuesday, January 25, 2011


Legislation option for hurting states

Senate Republican leaders said Tuesday they were considering introducing legislation that would allow financially stressed U.S. states to declare bankruptcy.

“We’re exploring that as a responsible option,” Sen. John Cornyn of Texas, who is heading the effort, told reporters.

Some Republicans embrace the idea, which would allow states to sort out finances and renegotiate contracts with public employee unions, as an alternative to sending in federal aid.

But analysts - and states themselves - are concerned the potential for bankruptcy would spook the buyers of debt from states, driving up interest rates and making borrowing more expensive.

Senate Republican leader Mitch McConnell, of Kentucky, said no decision has been reached on introducing legislation that would open bankruptcy courts to states beset by financial troubles from the 2007-2009 recession.

“There will be no bailout of states,” Mr. McConnell said.

The bankruptcy option was dismissed House Majority Whip Eric Cantor, Virginia Republican, on Monday, meaning any bill will face an uphill battle in that chamber.

Under the U.S. Constitution, states cannot declare bankruptcy as cities and counties can.


Gingrich calls for replacing EPA

DES MOINES| Former House Speaker Newt Gingrich called Tuesday for the elimination of the Environmental Protection Agency, which he wants to replace with a new organization that would work more closely with businesses and be more aggressive in using science and technology.

In an interview with the Associated Press, Mr. Gingrich said the EPA was rarely innovative and focused only on issuing regulations and litigation.

“What you have is a very expensive bureaucracy that across the board makes it harder to solve problems, slows down the development of new innovations,” Mr. Gingrich said.

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