Kirk Leads Coalition to Prevent Federal Bailout of States

Press Release

U.S. Senator Mark Kirk (R-Ill.), along with Senators Kelly Ayotte (R-N.H.), John Barrasso (R-Wyo.), Dan Coats (R-Ind.), Mike Crapo (R-Idaho), Ron Johnson (R-Wis.) Marco Rubio (R-Fla.) and Richard Shelby (R-Ala.) today introduced the No State Bailouts Resolution, S. Res. 215, which expresses opposition to the Federal bailout of financially struggling states like Illinois.

"This resolution expresses our support for blocking potential state bailouts and reducing states' spending - restoring confidence to lenders and lowering borrowing costs," Sen Kirk said. "Encouraging fiscal responsibility will help protect the Federal Government's credit rating."

The No State Bailouts Resolution declares that the States, as sovereign entities, retain control over their spending and taxation, and are therefore responsible for their own debts. The resolution also states that historic precedent opposes a bailout of the states, citing the historic example from the financial crisis of 1842. In the 1840s, several states faced funding crises, having spent so much that they could not repay their creditors. In 1842, the Senate requested then-Secretary of State Daniel Webster report any negotiations with state creditors to the Senate, in order to ensure no promises of Federal Government support were offered. As such, the cosponsors agree that the Federal Government should "take no action to redeem, assume, or guarantee State debt." States should see this resolution and recognize that the Federal Government is not going to bail them out of a fiscal insolvency and that the elected leaders in these states should take responsibility, and adopt measures to become fiscally responsible-- balancing their budgets the way that every American household does.

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