U.S. Senator Lindsey Graham's (R-South Carolina) amendment to the Fiscal Year 2014 Financial Services and General Government Appropriations Act to prohibit the federal government from bailing out municipalities which are facing bankruptcy, like Detroit, failed by a vote of 14-16.
"If you weren't worried about the federal government bailing out municipalities like Detroit, now you should be," said Graham. "All Americans should keep a close eye on where the Obama Administration and Congress are heading in terms of bailouts for cities like Detroit. The failure of my amendment is a very disturbing signal."
The Graham Amendment says:
- No federal funds may be used to purchase or guarantee any asset or obligation of any municipal, local, or county government if that locality has defaulted, is at risk of defaulting, or likely to default absent such federal assistance.
- In addition, the federal government would also be prohibited from issuing lines of credit or providing direct or indirect financial aid to prevent bankruptcy.
"The federal government is beyond broke," continued Graham. "The last thing we need is the broke bailing out the broke. There is no doubt Detroit has huge problems, but they are facing problems of their own making. Detroit and other municipalities facing these issues need to get their own financial houses in order."
"In South Carolina both our state government and localities have faced several lean budget years," continued Graham. "They were forced to make tough, painful decisions which were not easy. But they faced up to the challenges and did what was necessary. Other states and localities should do likewise."