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RSC Budget & Spending Task Force Urges Against Federal Bailout for State and Local Governments

May 12, 2020
Press Release
Argues any bailout fails to address COVID-19 threat while rewarding prior mismanagement

WASHINGTON – Today, in a letter to House and Senate leadership, the Republican Study Committee (RSC) Budget & Spending Task Force expressed its opposition to any federal bailout of mismanaged state and local governments made under the guise of COVID-19 relief. The letter, led by Task Force Chairman Jim Banks (IN-03), is the 38th policy proposal released under the RSC’s pandemic-focused Conservative Framework for Recovery, Accountability, and Prosperity (click here for more information). Statements of support from conservative leaders with Heritage Action for America, FreedomWorks, and Americans for Prosperity can be viewed below.

In the letter, the Task Force argues “[s]uch bailouts would fail to directly address the immediate threat of the pandemic and carry with them a number of perverse incentives and consequences. For instance, they would reward states that have mismanaged their budgets, incentivize future bailouts and reliance on federal funding, invite a bailout of underfunded pensions, fail to push states to enact spending reforms, and feed the Left’s ultimate goal of consolidating power in the federal government rather than empowering states.”

Citing the hundreds of billions of taxpayer dollars currently being directed to COVID-19 relief efforts, the Task Force notes “[a] direct federal bailout would also ignore the fact that state and local governments already have a variety of fiscal options available to ensure that they can continue to provide essential services to their citizens while also addressing the current pandemic.”

The Task Force also argues that “many of the states and localities that are making these requests have historically demonstrated a lack of respect for federal law and constitutional rights, and more recently a penchant for overly restrictive shutdown orders… A bailout of these jurisdictions would only serve to condone these actions and encourage economically oppressive restrictions on American people and businesses.

To view a signed copy of the letter, click here.



“Hoosier taxpayers should never be on the hook to bail out many years of mismanagement and poor leadership in states like Illinois,” said Task Force Chairman Banks. “They’ve made promises to workers with pensions and other benefits that they can’t keep. States like Indiana that are fiscally responsible shouldn’t be punished.”

“Rep. Banks and the RSC Task Force are absolutely right to oppose a federal bailout of state and local governments,” said Heritage Action for America Executive Director Jessica Anderson. “The federal government has already sent $320 billion in direct aid for coronavirus relief, and trillions more in indirect aid. Sending unrestricted money not related to coronavirus relief to states and cities would paper over past wasteful fiscal practices and encourage them to continue economically damaging lockdowns at a time when America should be working to reopen. Irresponsible state bailouts won’t help the economy recover — letting America get back to work will.”

"A direct bailout for state and local governments must be put entirely out of discussion,” said FreedomWorks President Adam Brandon. “If there is one thing that the right should agree on, it is that there is no circumstance under which states' fiscal irresponsibility should be aided and abetted by more fiscal irresponsibility from Congress. The RSC once again is taking charge on issues that matter, not only for our fiscal health, but for our Constitution's integrity."

“The national debt just exceeded $25 trillion – the last thing Americans need right now is to be on the hook for a trillion-dollar bailout to pay for decades of irresponsible policymaking,” said Americans for Prosperity Chief Government Affairs Officer Brent Gardner. “Another trillion-dollar boondoggle will only dig us deeper into this economic crisis and further erode our chances of a quick economic recovery. We applaud the RSC Budget and Spending Task Force for believing in order to rebuild a stronger economy you must remove barriers to growth and opportunity, not reward politicians who have made bad policy choices.”