[immibis]

There are (at least) two different ways of viewing this equation.

One view is that the government has a stockpile of money and can give out money as long as it has some and has to get more to refill its stockpile lest it run out. Taxes refill the stockpile. Bonds are borrowing money to keep the pile fuller for a fixed term.

Another view is to notice that the government stockpile is connected to the money printer, so it's not really a stockpile but actually has infinite capacity and can't run out. The cons of spending too much are not running out, but rather they are the cons of overprinting money - inflation. Infinity plus anything is still infinity, so taxes don't refill the stockpile (it's infinite) but they do unprint money to prevent excessive inflation. Bonds are paying people to unprint their money for a fixed term, at the end of which it is reprinted.

These are isomorphic models of the same system, which provide different insights.

[marcus_holmes]

Note that only governments that can print money can use your second model. So in the USA, only the Federal govt. California only has access to the first model, and could go bankrupt and/or default on bonds.

[nradov]

US states are sovereigns and so they can't literally go bankrupt. But they can become insolvent and cease paying on their obligations. Based on current credit ratings, if any state is going to become insolvent it's more likely to be Illinois than California.

[immibis]

That's a semantic game playing on the exact legal definition of "bankrupt". You know what they meant: a US state can run out of money.