Young sponsors bill to prevent state, local government bailouts

U.S. Sen. Todd Young (R-IN) on July 15 introduced legislation that would prohibit federal agencies from financially assisting state and local governments that have defaulted on their financial obligations.

“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,” Sen. Young said on Monday. “It is unfair for Hoosiers to be expected to pay taxes to bail out this fiscal irresponsibility.”

Sen. Young introduced the Government Bailout Prevention Act, S. 2120, with cosponsors U.S. Sens. Pat Toomey (R-PA) and Tom Cotton (R-AR) to prohibit any arm of the federal government, including the U.S. Federal Reserve and the U.S. Treasury Department, from paying or guaranteeing state and local obligations, according to a bill summary provided by Sen. Young’s office.

“Notwithstanding any other provision of law, no Federal funds may be used to purchase or guarantee obligations of, issue lines of credit to, or provide direct or indirect grants-and-aid to, any State government, municipal government, local government, or county government which, on or after January 1, 2019, has filed for bankruptcy, has defaulted on its obligations, is at risk of defaulting, or is likely to default, absent such assistance from the United States Government,” the bill states.

S. 2120 has been referred for consideration to the U.S. Senate Banking, Housing, and Urban Affairs Committee.

“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,” said Sen. Young.