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Reason Foundation

Let's Bail on a State and Local Bailout

Leonard Gilroy
November 17, 2008, 1:02pm

Reason Foundation is one of 59 groups to sign on to a coalition organized by the National Taxpayers Union to oppose a bailout of state and local government. From the press release:
(Alexandria, VA) -- As Congress reconvenes today for a lame-duck session, lawmakers no doubt are being inundated with requests for more federal giveaways on the taxpayer's dime -- the latest of which is a new spending plan that would provide bailout funds to states and localities. In its latest effort to stop "bailout mania," the 362,000-member National Taxpayers Union (NTU) has led a coalition of 59 grassroots organizations representing millions of taxpayers in opposing the plan. "State and local government budgets should not be balanced on the backs of federal taxpayers," the signatories wrote in a letter to Congress today. "Doing so would set a horrible precedent, discourage responsible budgeting in the future, and place a greater strain on America's hard-working families and businesses." The letter was supported by national organizations such as the American Legislative Exchange Council (ALEC), Americans for Prosperity, the Council for Citizens Against Government Waste, and Reason Foundation, as well as state-level groups such as the Howard Jarvis Taxpayers Association (CA), Florida Taxpayers Union, and Illinois Policy Center. State outlays have seen unsustainable growth over the past decade: Spending is up 124 percent over where it was 10 years ago, and state debt has increased by 95 percent. "Clearly, some states and localities allowed themselves to be caught up in the borrow-and-spend mania," the signatories note. "Now that the economic picture doesn't look as rosy as it once did, some want to continue this upward spiral on the federal taxpayer's dime. We believe that if troubled state and local entities seek lasting relief and stability, they should restructure their activities the way millions of families have had to restructure their budgets." The letter concludes with a statement from South Carolina Gov. Mark Sanford, who, in testifying before the House Ways and Means Committee on October 29, 2008, urged Congress to "accept that there may be better routes to recovery than a blanket bailout, including offering states like mine more in the way of flexibility and freedom from federal mandates instead of a bag of money with strings attached." The letter also quotes Dr. Richard Vedder, a member of NTU's Board of Directors and ALEC's Board of Scholars, who said, "A federal bailout is the wrong solution to the wrong problem." "We concur that reducing expensive mandates -- which have cost states $131 billion over the past four years -- would be one way the federal government could reduce pressure on state and local governments without spending more taxpayer dollars," the signatories conclude.
The full letter is here, and check out NTU's new BeyondBailouts.org website along the way.

Leonard Gilroy is Director of Government Reform


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