As the Federal government tries to wrangle a deal to keep the country afloat, there are already some parts of the country that are bankrupt, even if not technically “in bankruptcy.” Cities that borrowed money by issuing municipal bonds are now so burdened with debt that they can’t pay back what was promised to those who invested. Add to that mess, a few bribes, an unfathomable refinancing deal with a leading Wall Street bank, and a broken sewage system, and you’ll end up with Jefferson County, the local government for Birmingham, Alabama.

We’ve talked a lot about states’ budget crises on The Takeaway. Yesterday we discussed legislation that would allow states to declare bankruptcy. Many state policymakers blame their financial woes on public employees and their expensive pension plans. Utah was in the same boat — until the state legislature enacted sweeping reforms, changing public pensions to private 401(k)s. Will this become law in other states? How will privatizing pensions affect state employees and taxpayers? 

Forty-four states and Washington, D.C. anticipate budget shortfalls of over $125 million by the end of fiscal year 2011, according to the Center on Budget and Policy Priorities. Many state policymakers are blaming their budget crises on public sector employees, citing expensive pension plans. Crushing state debt has caused some federal lawmakers to consider a legislative remedy: allowing states to file for bankruptcy. But will declaring bankruptcy really solve states' pension woes? How will unions react? What other remedies exist for debt-ridden states?

The inauguration season for the nation’s newly elected governors will take place over the next few weeks. Republicans gained six governorships, which means they’ll hold 29 seats, while Democrats will hold 20.  (Lincoln Chafee, in Rhode Island, will be the only independent). The executive control these governors wield in state governments across the country will have a noticeable impact on the balance of power for both parties in the coming years.

Governors are smaller versions of the Head of State, but they have big personalities. One only needs to look to Governors Arnold Schwartzenegger, Rick Perry, and former Governors Sarah Palin, Mark Sanford, and Rod Blagojevich for proof of that. As a new class takes office next week, what will they bring, be it controversy or leadership...or both? 

Virginia's Attorney General Ken Cuccinelli is one of several politicians spearheading a proposal for re-balancing state and federal power, through what's being called the "repeal amendment." The amendment to the Constitution would, with a vote of 33 states' legislatures, give states the ability to repeal any federal law passed in Congress. Virginia has a long history of states' rights activism — in response to the federally-mandated desegregation of schools in the 1950s, state leaders responded with "massive resistance," choosing to privatize some school districts to prevent integration. As the South commemorates the 150th anniversary of the Confederacy, is this new emphasis on states' rights a step towards secessionism?

There has long been wrangling in Congress over the question of federal authority versus States' Rights. But as national health care, economic stimulus funding, and other federal programs come up against detractors in local municipalities, is there a new discussion forming on the issue?  

Earlier this year, the Pew Center released a study estimating that there is a one trillion dollar gap between what states had promised workers in retiree pensions and benefits, and the money they currently had to pay for it all.

In an attempt to remedy the gap, lawmakers in Colorado, Minnesota and South Dakota have voted to reduce annual cost-of-living increases on pensions. Not surprisingly, retirees in each state have filed lawsuits.

A federal judge has overturned Proposition 8, the California ballot measure that defines marriage as between one man and one woman.  The measure passed with 52 percent of votes in November 2008. Yesterday, Judge Vaughn Walker ruled it unconstitutional on 14th Amendment grounds of due process and equal protection under the law. 

In a decision that ran more than 100 pages, Judge Vaughn Walker stated that "Proposition 8 fails to advance any rational basis in singling out gay men and lesbians for denial of a marriage license. Indeed, the evidence shows Proposition 8 does nothing more than enshrine in the California Constitution the notion that opposite sex couples are superior to same-sex couples."

Long-term debt obligations. Bond interest rates. Pension liabilities. These words may make your eyes glaze over, but it might be time to sit up at attention. State governors from across the country met in Boston last weekend at the National Governors Association meeting, and their fiscal woes were at the top of the agenda.

We've all heard a lot about Arizona's controversial and stringent immigration law, SB 1070, which allows Arizona police to question anyone they suspect may be in the country illegally. But 44 other states have introduced immigration legislation of their own since the beginning of 2010. Some worry that the U.S. may soon be facing a patchwork of different laws for different states.

Anna Sale here on the day shift.

We had a great conversation this morning about President Obama's charge to secure the world's nuclear material in four years, but we still have more questions. Which countries possess unsecured nuclear material? Where is that material located, which groups want to get their hands on it — and which groups already have their hands on it? We’re hoping to answer some of these questions with Sharon Squassoni, an expert on nuclear proliferation and prevention with the Center for Strategic and International Studies. And we’re on the hunt for an investigator who works to track down stolen nukes for some insight into what kind of detective work goes into finding and securing dangerous nuclear material.

UPDATED 5:30 p.m.

Alex Goldmark here for the evening stretch. So far segments are swimming along smoothly and the sun is streaming in steadily to our WNYC office. Yes, that is cause for excessive alteration. Here are your updates to the plans for tomorrow's show.

While President Obama is meeting with world leaders in Washington about nuclear non-proliferation. The latest news is that Obama and Chinese President Hu Jintao are in talks about teaming up to come up with stronger sanctions. We'll talk about some of the dangers of a nukes tomorrow, specifically dirty bombs that could result in the excess nuclear materials from deactivated military arsenals. How dangerous is active non-proliferation in an age of terrorism? 

The White House has floated a new prospect as a possible nominee to the Supreme Court to fill the coming vacancy of Justice John Paul Stevens. We have our Washington correspondent Todd Zwillich looking into this previously under the radar federal judge from Montana. Who exactly is Sidney Thomas? And why is President Obama letting out an extra name now when some people expected a predictable nomination announcement?

California is facing a $20 billion dollar deficit and is asking the federal government for roughly $8 billion to help stay afloat. The governor has threatened to cut back, if not eliminate, basic social services like the state's welfare program, if not granted some financial assistance. We talk with Dan Walters, political columnist for the Sacramento Bee, about what the state needs to recover.

The rate of incarcerations in Texas is on the decline since the implementation of a new program that redirects money from the prison system to rehabilitation programs. Adam Gelb, of the Pew Center on the States, and Jim Marquart, a former sergeant in the Texas Department of Corrections, explain how the program works.

The Bureau of Labor Statistics will release November's unemployment numbers this morning; most observers expect unemployment to rise once again. Millions of Americans are either un- or under-employed, and many are making ends meet with unemployment checks. Some of the state unemployment funds paying those checks, however, are going bone dry. Carl Guzzardi, tax director for the Connecticut labor department, says the state is having to borrow billions of dollars. The Ford Foundation is helping many states overhaul their unemployment systems; Director of Quality Employment Helen Neuborne joins us to describe their efforts. And Georgia's Labor Commissioner, Michael Thurmond, discusses Georgia's attempts to overhaul their unemployment system.

NASA recently found water on the moon; maybe they can help California find some now. Experts are expecting record lows for the amount of water that they'll be able to deliver next year: a measly 5% of what cities and farms are requesting. What can Californians and Gov. Schwarzenegger do? We talk with Eric Garner, managing partner of Best, Best & Krieger. He's one of the leading experts on water in California, having litigated many water disputes and negotiated many agreements in the Golden State. He's also seen many other countries around the world sucessfully deal with the same problems as California.

The White House has a plan to have states compete for cash prizes for their school systems, funded from $4 billion in stimulus money. It's being called the "Race to the Top." To explain what the program could mean, we speak with Beth Fertig, education reporter at WNYC. She is also the author of the book, “Why cant u teach me 2 read?: Three Students and a Mayor Put Our Schools to the Test.” For a skeptic's view, we also speak to Jeanne Allen, president of the Center for Education Reform in Washington, D.C.

We begin a new series on the impacts of state budget cuts around the country – governors and legislators are making deep cuts, with effects easily felt by residents. Maryland may cut $1 billion from its budget by the end of 2009. One of the proposed cuts affects a mental hospital in a rural community along the Chesapeake Bay; the governor says closing it would save $9 million. But residents worry there will be no safety net to catch its patients. We hear from reporter Melody Simmons, from our partner WEAA in Baltimore, as well as Tanya Rider, assistant director of nursing for the Upper Shore Community Mental Health Center.

After months of wrangling, Senate Majority Leader Harry Reid (D-Nev.) announced yesterday that the health care legislation on its way to the Senate floor will include a public option. Takeaway Washington Correspondent Todd Zwillich joins us to discuss the latest legislative moves, along with the option for states to opt-out.