Bailing Out the States

Are you from a state that just can’t seem to pay its bills? Never fear, President Obama and the U.S. Congress are coming to your rescue.

Congress recently passed, and Obama recently signed, a bill that will effectively bailout states with an additional $26 billion the federal government doesn’t actually have. Though it is argued that the bill would be paid for in the future with increased taxes, withdrawing funding from a loan program and suggested cuts in food stamps — not to take place until 2014 — some lawmakers, including House Speaker Nancy Pelosi, have voiced opposition to such methods of payment. In addition, one provision in the bill reportedly mandates that one state, Texas, maintain its current levels of education spending through 2013.

Obama emotionally appealed to the moral sensibilities of Americans when he argued the following:

We can’t stand by and do nothing while pink slips are given to the men and women who educate our children or keep our communities safe.

Which children and communities is he referring to? What the bailout amounts to is taxpayers from one state paying to bailout another state. I believe the phrase is, “Robbing Peter to pay Paul.”

[picapp align=”left” wrap=”true” link=”term=obama+august+10&iid=9527059″ src=”″ width=”234″ height=”155″ /]Supporters of said bailout rhetorically justify it by pointing to the massive bailouts of banks and car companies that have already transpired – continuing the use of the argument that two, or three, wrongs make a right. Such arguments appeal to populist sentiments against those corporate bailouts while at the same time continuing the bailout culture predominant in Washington over the last several years.

The effect of this type of bailout is to essentially, for all intents and purposes, end the requirement that states maintain balanced budgets. If they face budgetary woes, as pretty much everyone is during this economic downturn, they can just run to the federal government, with its endless supply of borrowed and printed money, to bail them out.

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