Measure seeks to halt government bailouts

Sens. Todd Young (R-IN), Pat Toomey (R-PA) and Tom Cotton (R-AR) introduced Monday a bill designed to ensure federal funds cannot be used to help state, territory or local governments pay off obligations.

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The Government Bailout Prevention Act would result in no arm of the federal government, including the Federal Reserve System and the Treasury Department, paying or guaranteeing state and local obligations, if that state or local government entity has filed bankruptcy, has defaulted on its debts or is at risk of bankruptcy or default.

“Unfortunately, a number of state and local governments continue to spend more money than they bring in and are racking up dangerous levels of debt,” Young said. “It is unfair for Hoosiers to be expected to pay taxes to bail out this fiscal irresponsibility. These governments need to be on notice that they can’t continue down their fiscally risky path and expect federal taxpayers to pick up the check.”

Toomey said taxpayers should not bail out failing industries, businesses or banks.

“The same applies to state and local governments that overspend and mismanage their budgets into bankruptcy,” he said. “Now some in Washington are pushing for the Federal Reserve and other federal agencies to spend billions to clean up these mistakes, which is unfair. This legislation protects American taxpayers by ensuring their dollars aren’t used to bail out state and local governments.”