The Atlantic author seems deeply confused. Not unexpected for David Frum. Puerto Rico is a territory, not in any state. A city is under state sovereignty.A state or a city can default. A city can declare bankruptcy under Federal law. There is no law allowing a state to go bankrupt and be managed by the Feds. Bankruptcy is an option , not a Federal power. McConnell isn't playing 7 dimensional chess, he just doesn't want to return tax money to Blue states and was just using language loosely when he said "bankrupt".