Our country’s reliance on federal money (aka bailouts) has unfortunately continued to increase. The passage of the Troubled Asset Relief Program (TARP) and the $800 billion “stimulus” bill is largely to blame. These taxpayer-funded monstrosities have consequently stoked the current bailout culture that threatens the financial stability of this country. Instead of promoting the practice of fiscal restraint, sound money management and fiscal accountability, TARP has promoted the practice of fiscal improprieties, poor money management, and the scapegoating of others when faced with financial hurdles. The financial magnitude of Obama’s newly passed health care bill also promotes these things.

One of the more recent examples of this trend is Washington State, which, like so many other states, is now working to acquire more money from DC to pay for the federally mandated expansion of its Medicaid program. Washington’s Governor, Christine Gregoire, has been leading the state’s crusade to convince Capitol Hill lawmakers to send the state more federal dollars.

According to The Seattle Times, Gov. Gergoire is asking for what would amount to $480 million over the next 12 months. Typically a cheerleader for Gregoire’s tax, borrow, and spend policies, even The Seattle Times is now pointing out the fact that at some point, governments have the deal with the reality of their overspending problem. According to The Times, “That time is now.”

Let’s not forget that all federal revenue either initially, or eventually (if the government chooses to borrow), comes from the federal taxes that Washington State residents have already sent to DC. Given that bailout money comes from the taxpayers, bailouts, regardless of their price tag, are a mechanism for market distortion and market inefficiency, as they take more capital out of the marketplace and consequently leave fewer resources for the private sector to invest, innovate, and grow.

The Seattle Times writes:

“The idea is that the resources available to the whole society have shrunk, and that budgets need to accommodate themselves to the new reality. Families have had to do this. Businesses have had to do it. Now government has to do it.”

Federal bailouts should not, and cannot be the prescriptive policy in the event that states outspend their means. If we do allow federal bailouts to persist, then we will continue to throw fiscal accountability out the window and indulge the fiscal incompetence of our state governments. Bailouts put taxpayers on the hook for the poor budgetary decisions of legislators who failed to meet their bottom lines. We hope Washington, and the other states that are lobbying for federal bailouts, learn that states, like the average taxpaying family, need to learn to live within their means.