Dean Baker looks at Federal debt default

It is not that bad, he says.

Actually it would be a positive outcome if handled right. First, lets accompany our default with some restructuring, lets break up the DC monopoly and add more Senators to the less represented regions. Lets split up the central bank, while we are at it, and form regional governments.

We can still keep central government, and among other things, lets split the debt up a bit. A third of the debt allocated to bond holder haircuts, a third gets passed down to regional government along with their new central banks, and a third is retained in Washington DC.

Another stipulation? DC can only tax the filthy rich, not allowed to tax incomes less than a million.

The regional governments created would be, the California system, the Texas system; each getting an increment of Senators for their mini states. Then we have Cascadia, the New York system, the Florida system and middle America. A total of six independent regions, all formed within the bounds of the Constitution.

We create a rule, anytime central government tries to tax the less wealthy, then the regional government are no longer bound to cover debt service on their part of the debt.