The chatterati have been babbling on about Mitch McConnell's remark last month concerning letting states declare bankruptcy. Let's put this horse down right now. Federal law does not permit states to declare bankruptcy, and it would involve an amendment to the Federal Bankruptcy Code to even permit this to happen. Researchers would be advised to look to the state of Arkansas from 1933 for an example of how this might play out for states that were permitted to do so. It isn't pretty. States can be insolvent, but they can't go bankrupt. In the former case, they are declaring an inability to pay their current bills, but it doesn't involve an unelected Federal Judge from elsewhere to prescribe solutions for creditors. Puerto Rico in 2014 provides an instructive example there.
There is always Municipal Bankruptcy. Well, yes if it is permitted by State law. Oregon doesn't permit municipal bankruptcy without amending the Oregon Constitution. And if that happens, one can look to Orange County, CA for an example of how that worked out.
In short, the odds of Oregon (1) declaring bankruptcy or (2) Oregon allowing municipal bankruptcy are virtually nil.
Thus, this is a solution that isn't on the table now or anytime in the near or distant future. With this said, I still expect some legislators, likely from the same party as Mitch McConnell, to try to force PERS retirees to accept some cuts to their current benefits. Whether the current Supreme Court would permit this remains an open question. The Moro ruling (2015) seems to preclude this possibility, but circumstances change, and the current situation is unprecedented in my lifetime. People who ask me to forecast the future are grasping at straws. My magic 8 ball says, "ask another time with more information".
