ALG Urges House to Reject $154 Billion Bankrupt State Bailout

Dec. 16, 2009, Fairfax, VA—Americans for Limited Government President Bill Wilson today in a letter urged members of the House to reject the bailout of state governments with taxpayer funds paid back by banks through the Troubled Asset Relief Program TARP.

Wrote Wilson, “Bailing states out of their own reckless decisions is as irresponsible as bailing out poor decisions by investment firms, or GSE’s like Fannie Mae and Freddie Mac. I urge you to vote no on this legislation, which will raid TARP funds in a kickback to public sector unions that donated generously to your campaign coffers.”

“Congress is now running the risk of creating a revolving line of credit for state governments,” Wilson stated in the letter, warning that state government had already received bailout funds earlier this year.

The $789 billion “stimulus” bill also contained $53.6 billion to bail out state and local governments.

According House Speaker Nancy Pelosi’s website, the bill (HR 2847) in total will cost $154 billion of taxpayer funds allocated from TARP.

“Americans for Limited Government believes that using repaid TARP funds to bail out the public sector unions in bankrupt states like California and New York is irresponsible,” Wilson stated. “It should instead be used to pay down the $12 trillion national debt.”

Speaking on December 3rd in Washington, Barack Obama announced the plan: “Next year we’re going to still have some of those challenges because usually state and local government revenues lag the recovery as a whole. They may need some more help from the federal government.”

Obama indicated the federal government had a responsibility to engage in deficit-spending on behalf of revenue-strapped states. “Frankly, because state and local governments generally don’t have the capacity to engage in deficit spending, some of that obligation falls on the federal government,” said Obama.

Wilson laid responsibility for the staggering budget deficits in states at the feet of elected officials and public sector unions. “The expansion of state workforces over the past two decades, and the unwillingness on the part of lawmakers to scale back when the economy turned south, is the primary reason for the tremendous budget gaps faced in state capitals across the country.”

“The solution is for states to balance their budgets, not for the government to extend TARP funds to irresponsible politicians,” Wilson added, concluding, “The bottom line is that the interests of taxpayers are not served by taking repaid TARP funds and funneling it to your favored political constituencies. That is dishonest graft of the highest order, and only you can stop it.”