Richard B. Mc Kenzie's op-ed "It's Hard to Tax Things That Move" highlights how labor and capital can flee high-tax jurisdictions, a concept from his 1991 book "Quicksilver Capital" with Dwight Lee. When politicians overspend and voters leave states like New York, Illinois, and California for Florida, Tennessee, and Texas, borrowing becomes the solution.

As fiscal conditions worsen, bond investors demand higher rates and underwriters impose restrictions. William S. Peirce of Gates Mills, Ohio, a former bond analyst, notes rating agencies treat states as monopolies that can always raise taxes, giving California an S&P AA- rating with no state below A-.

Winslow Marston of Morristown, N. J. predicts agencies will be more embarrassed by state ratings than they were with collateralized mortgage obligations before the 2008 collapse, as governmental jurisdictions face real competition and mobile populations.