ATR Supports the Government Bailout Prevention Act

Share on Facebook
Tweet this Story
Pin this Image

Posted by Tom Hebert on Thursday, August 8th, 2019, 2:30 PM PERMALINK

Senators Todd Young (R-Ind.), Pat Toomey (R-Penn.), and Tom Cotton (R-Ark.) have introduced S. 2120, the “Government Bailout Prevention Act,” legislation that takes federal taxpayers off the hook for the fiscal mismanagement of state and local governments. Americans for Tax Reform supports this legislation and urges its passage. 

S. 2120 prevents federal dollars from going towards bailouts of state and local governments that declare bankruptcy. This bill prohibits any arm of the government, including the U.S. Treasury and the Federal Reserve, from guaranteeing state and local government obligations. This bill does not impact federal assistance in the event of a natural disaster. 

Runaway state spending is a serious, bipartisan problem. In Fiscal Year 2017, forty states did not have enough money to pay all of their bills. According to the nonpartisan fiscal watchdog Truth in Accounting, the total unfunded debt among the 50 states is more than $1.5 trillion. State taxpayers will bear the burden of government largesse for generations to come. 

The federal government certainly doesn’t have the money to bail out insolvent state governments. The national debt is $22 trillion and counting. By 2027, interest payments on the debt will eclipse military spending. By 2048, the nonpartisan Congressional Budget Office projects that federal spending will consume 30 percent of GDP, exceeding projected federal revenues by 10 percent. 

D.C. lawmakers have shown no appetite to curb spending, as they have routinely disregarded spending caps and refuse to take up entitlement reform. Social Security, Medicare, and Medicaid comprise well over half of federal spending. Starting next year, the Social Security Administration will start paying out more in benefits than it takes in, and the program will be completely bankrupt by 2034. Medicare will be out of money in 2026. 

The Government Bailout Prevention Act prevents Washington politicians from using money they doesn’t have to pay off debt that state governments shouldn’t have accumulated. The bill is an important first step towards bringing fiscal responsibility back to the states. Congress should pass S. 2120 and President Trump should sign it into law.

Photo Credit: Ken Teegarden - Flickr

×