Find the best financial services for you at: SMARTFINANCESOLUTIONS.NET - If the stimulus was good, why do policy makers seek a way for states to declare Bankruptcy, which is illegal? - Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

http://www.nytimes.com/2011/01/21/busine…

I imagine states can't but cities can because of the levels of govt they at the moment hold authority to. -