” It will be difficult to tell the difference.”
theoretically, it would be WAY WAY worse than if the protection of a bankruptcy court was available to them ... without that, their inability to pay their bills, repay their bonds, pay their entitlements, and pay their pensions would likely result in total chaos ...
Yes, good point.
You can “war-game” a scenario in Chicago / Illinois where an economic downturn causes tax collection to drop significantly, causes large losses in poorly managed pensions, and financially blows-up state-run entities like, hospitals, toll roads, airports, etc... (also revealing deep corruption and mismanagement ).
If the solution isn’t bankruptcy, it then becomes entirely political - and judicial. Can you imagine what it would like having people like Kimm Foxx, Lori Lightfoot, Mike Madigan, Jesse Jackson, Rahm Emanuel etc... trying to manage cuts in services, selling new debt, and massively raising taxes? It would be utter chaos.