BLUE MODEL BLUES: Puerto Rico Crisis: Coming Soon to the Mainland.

The problems that forced Puerto Rico belly-up—first and foremost, a bloated public sector and untenable pension obligations—are not confined to Puerto Rico, the island’s governor reminded U.S. policy wonks in a speech last week. Alejandro Padilla’s government may be the largest to go bankrupt so far, but that dubious distinction may be tested in the near future. . . .

Padilla is entirely right. At over three trillion dollars, according to some estimates, America’s state and local pension crisis is much worse than most policymakers understand. Cities like Stockton and Detroit have already filed for Chapter Nine, and there are murmurs that Chicago might do the same if it experiences another blow to its fiscal health. In fact, it seems downright likely that the next recession will bring a wave of Puerto Rico-style municipal bankruptcies.

The collapse of recklessly-managed state and local finances on the mainland will create a political crisis of far greater proportions than Puerto Rico’s struggles. Congress should heed Padilla’s advice and start pressuring states and localities to get back on track. It should also develop a framework for managing these meltdowns if and when they do occur (Will assistance be available? On what terms?) as they do occur, so as to avoid extended squabbling and gridlock when the rubber meets the road.

They should do this. But when do they ever do this?