Congressman Andy Barr (KY-06) today introduced H.R. 5276, the No Bailouts for State, Territory, and Local Governments Act. The bill prohibits the use of federal funds to bail out any state, territory, municipal, local or county government that is bankrupt or at risk of default. It also prohibits the Department of Treasury and the Federal Reserve from bailing out state, territorial, and local governments in financial distress.
“Puerto Rico’s recent default on a $422 million debt payment has reinforced concerns about other state and local governments that have overextended themselves and made promises too big to keep,” said Congressman Barr. “This legislation makes clear that federal taxpayers will not be on the hook for their fiscal mismanagement. As we continue to debate legislation to address Puerto Rico’s debt crisis, it is important that we send a strong signal to other cash-strapped states and cities that they must reform their broken finances because there will be no bailout from Washington.”