Bill Summary
This legislation, known as the "Government Bailout Prevention Act," aims to prohibit the use of federal funds to financially assist state and local governments that have defaulted on their obligations. The definition of "state" in this Act includes any of the 50 states, the District of Columbia, and any territories or possessions of the United States. It also prohibits the Federal Reserve Banks, the Department of the Treasury, and other federal agencies from providing financial assistance to these governments. This prohibition does not apply in the case of a declared disaster. Additionally, the legislation specifies that it includes debt restructuring and related activities, but excludes discretionary appropriations, direct spending, and grants awarded by the United States to these governments. Overall, the purpose of this legislation is to prevent the government from using federal funds to bail out state and local governments that are struggling financially.
Possible Impacts
1. This legislation could affect state and local governments by prohibiting them from receiving federal funds to help pay off their obligations. This could lead to financial difficulties and potential defaults for these governments.
2. It could also affect the Federal Reserve Banks and other federal agencies by preventing them from financially assisting governments that have defaulted on their obligations. This could limit their ability to support the economy and could have a ripple effect on the overall financial system.
3. Additionally, this legislation could potentially affect individuals living in areas with governments that have defaulted or are at risk of defaulting. Without federal assistance, these governments may have to make cuts to essential services and programs, impacting the quality of life for residents.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4572 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 4572
To prohibit the provision of Federal funds to State and local
governments for payment of obligations, to prohibit the Federal Reserve
Banks, the Department of the Treasury, and other Federal agencies from
financially assisting State and local governments that have defaulted
on their obligations, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 27, 2019
Mr. Rooney of Florida introduced the following bill; which was referred
to the Committee on Oversight and Reform, and in addition to the
Committee on Financial Services, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To prohibit the provision of Federal funds to State and local
governments for payment of obligations, to prohibit the Federal Reserve
Banks, the Department of the Treasury, and other Federal agencies from
financially assisting State and local governments that have defaulted
on their obligations, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Government Bailout Prevention Act''.
SEC. 2. DEFINITION.
In this Act, the term ``State'' means--
(1) any of the several States;
(2) the District of Columbia; and
(3) any territory or possession of the United States.
SEC. 3. PROHIBITION ON THE USE OF FEDERAL FUNDS TO PAY OR GUARANTEE
STATE AND LOCAL OBLIGATIONS.
(a) In General.--Notwithstanding any other provision of law, no
Federal funds may be used to purchase or guarantee obligations of,
issue lines of credit to, or provide direct or indirect grants-and-aid
to, any State government, municipal government, local government, or
county government which, on or after January 1, 2019, has filed for
bankruptcy, has defaulted on its obligations, is at risk of defaulting,
or is likely to default, absent such assistance from the United States
Government.
(b) Limit on Use of Borrowed Funds.--The Secretary of the Treasury
shall not, directly or indirectly, use general fund revenues or funds
borrowed pursuant to title 31, United States Code, to purchase or
guarantee any asset or obligation of any State government, municipal
government, local government, or county government, or otherwise to
assist such government entity, if, on or after January 1, 2019, that
State government, municipal government, or county government has
defaulted on its obligations, has filed for bankruptcy, is at risk of
defaulting, or is likely to default, absent such assistance from the
United States Government.
(c) Prohibition on Federal Reserve Assistance.--Notwithstanding any
other provision of law, no Federal Reserve Bank may provide or extend
to, or authorize with respect to, any State government, municipal
government, local government, county government, or other entity that
has taxing authority or bonding authority, any funds, loan guarantees,
credits, or any other financial instrument, including the purchasing of
the bonds of such State, municipality, locality, county, or other
bonding authority, or to otherwise assist such government entity under
any authority of any Federal Reserve Bank.
(d) Limitation.--Subsections (a) through (c) shall not apply to
Federal assistance provided in response to a declared disaster.
SEC. 4. APPLICABILITY.
The prohibition under section 3--
(1) includes debt restructuring or any other related
activity; and
(2) does not include--
(A) any discretionary appropriations or direct
spending, as those terms are defined in section 250(c)
of the Balanced Budget and Emergency Deficit Control
Act of 1985 (2 U.S.C. 900(c)); and
(B) any grant awarded by the United States to the
State government, municipal government, local
government, or county government.
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