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US Government Debt Different - Finance Department - University of ...

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Charles W. Mooney, Jrbegin by noting the dearth <strong>of</strong> evidence concerning its origins and underlyingpurposes. 49 There is a good case to be made that its originsderive in substantial part from the federalism concerns that underliediversity jurisdiction <strong>of</strong> the federal courts. 50 “[U]niform Laws onthe subject <strong>of</strong> Bankruptcies throughout the United States,” 51 then,like federal courts in the diversity jurisdiction context, could providea more neutral system that would be less biased in favor <strong>of</strong> localparties. While this federalism-related explanation carries significantweight, scholars continue to ponder the purposes and scope <strong>of</strong> theBankruptcy Clause. 52193I am aware <strong>of</strong> no evidence that the Framers considered the possibilitythat the Bankruptcy Clause might empower Congress to enacta law that would allow the U.S. government to discharge its debts.But surely that does not resolve the issue. I also am unaware <strong>of</strong> anysign that they considered municipal bankruptcies, but provisionsfor municipal bankruptcies have been on the books for more thanlieve him <strong>of</strong> his obligations to pay the underlying debts.” Bruce H. Mann, Republic<strong>of</strong> <strong>Debt</strong>ors: Bankruptcy in the Age <strong>of</strong> American Independence 80 (2002). On theother hand, “bankruptcy laws accomplished the same end [as insolvency laws] butalso discharged the debtor from liability for unpaid debts.” Id., Within a few years,however, the Bankruptcy Clause was understood to empower Congress to enact eithertype <strong>of</strong> law. Jonathan C. Lipson, <strong>Debt</strong> and Democracy: Towards a ConstitutionalTheory <strong>of</strong> Bankruptcy, 83 Notre Dame L. Rev. 605, 633 (2008) [hereinafter, Lipson,Democracy]. Accordingly, I use the terms bankruptcy, bankruptcy law, and bankruptcyproceedings in this broad sense.49 See generally, e.g., David A. Skeel, Jr., <strong>Debt</strong>’s Dominion: A History <strong>of</strong> BankruptcyLaw in America 3, 23-47 (2001) [hereinafter Skeel, <strong>Debt</strong>’s Dominion], citing TheFederalist No. 42 (James Madison) (Clinton Rossiter ed., 1961):Almost the only contemporary evidence <strong>of</strong> the meaning or importance <strong>of</strong> uniformbankruptcy comes in the Federalist No. 42. Written by James Madison,Federalist No. 42 describes federal bankruptcy legislation as intimately connectedwith the regulation <strong>of</strong> commerce, and necessary to prevent debtors from fleeingto another state to evade local enforcement <strong>of</strong> their obligations.50 See Charles W. Mooney, Jr., A Normative Theory <strong>of</strong> Bankruptcy Law: BankruptcyAs (Is) Civil Procedure, 61 Wash. & Lee L. Rev. 931, 982-90 (2004) [hereinafter,Mooney, Normative Theory].51 U.S. Const. art. I, § 8, cl. 4.52 See, e.g., Skeel, <strong>Debt</strong>’s Dominion at 23 (quoted supra note 49); Lipson, Democracy,supra note 48; Thomas Plank, Bankruptcy and Federalism, 71 Fordham L. Rev. 1063,1090 n.106 (2002).; Charles Jordan Tabb, The History <strong>of</strong> the Bankruptcy Laws in theUnited States, 3 Am Bankr. Inst. L. Rev. 5, 7-11 (1995).

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