An old, arcane law absolves American states from the obligation to pay their debts. While that option is rarely used, experts warn that it can lead to excessive state debt and other problems. One remedy would be to allow states to file for bankruptcy. However, Vincent Buccola, Wharton professor of legal studies and business ethics, believes there is a more effective option. In his latest research, he focuses on tax-credit borrowing as a way to ease the burden for bondholders and hold states more accountable. He spoke to Knowledge at Wharton about the idea. Knowledge at Wharton: Could you explain what this paper is about and what some of the findings were? Vincent Buccola: This position brief is based on a paper I published in the Duke Law Journal . It takes up the problem of state overborrowing — in Illinois, California and so on. The paper really has two conclusions for policy makers. One of them is negative or sort of pessimistic, and one is maybe more optimistic. I’ll start with the pessimistic findings.…