McConnell Says He Supports Letting States File For Bankruptcy

The transcript discusses the controversial idea of allowing states to declare bankruptcy, proposed by Mitch McConnell after a coronavirus relief package was passed. The proposal faced strong opposition from leaders like New York Governor Andrew Cuomo and Maryland Governor Larry Hogan, who argued it would harm the national economy. Legally, states cannot declare bankruptcy under current laws, and significant legal changes would be required to allow it, including amendments to the federal Bankruptcy Code and state laws, as well as a Supreme Court ruling.

What legal barriers exist that prevent states from declaring bankruptcy?

What would need to happen for states to be able to declare bankruptcy?