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In the News: The Silent Bailout of the States
In 2009, the stimulus allocated $144 billion to struggling state and local governments—with a disproportionate amount of funds going to the most fiscally irresponsible states. Barry Poulson, in his recent article on Forbes.com, argues that the escalating “silent bailouts” of state governments over the past decade is one of the greatest threats to our economic freedom.
If our own silent bailout continues to grow over the next business cycle, we should expect further challenges to the creditworthiness of the federal government. In fact, the Congressional Budget Office (CBO) predicts that, at this rate, by 2022 U.S. national debt will reach 90 percent of our GDP. State and local governments have accumulated $2.4 trillion in debt, or more than 15 percent of GDP, and face their own fiscal crisis with credits downgrades and municipal bankruptcies.
The silent bailout is accelerating in America and moving us closer to the fiscal crises encountered in other major debtor countries. There is no greater threat to our economic freedom than the fiscal profligacy engendered by the silent bailouts encouraging greater and greater debt.
Read the entire article here.