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State and Local Government Bailout Would Burden Taxpayers
November 17, 2008
Dear Member of Congress:
Over the past few weeks, you've been asked to lend your official support for a new spending plan that would provide bailout funds to states and localities. On behalf of the undersigned grassroots organizations, we urge caution in moving forward with such a plan. State and local government budgets should not be balanced on the backs of federal taxpayers. 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.
Thus far, most of the bailout money approved by Congress has been targeted toward financial entities. Yet we're seeing more and more interests sinking into the "me too" mode. We're disappointed to see that this camp has grown to include many state and local governments, who are looking to supplement their spending habits via direct subsidies or bond backing from Congress.
On the whole, state outlays have grown at a fast -- some would argue unsustainable -- clip over the past decade. Indeed, spending is up 124 percent over where it was 10 years ago. During this same time frame, state debt increased by 95 percent. Clearly, some states and localities allowed themselves to be caught up in the borrow-and-spend mania.
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.
In his October 29, 2008 testimony before the House Ways and Means Committee, South Carolina Governor Mark Sanford 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." As Dr. Richard Vedder from ALEC's Board of Scholars has 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.
National Taxpayers Union