What Do State Bailouts Really Mean?

John Hood writing at National Review suggests in addition to encouraging state profligacy, federal bailouts of state governments are an “act of contempt for constitutional government.” Congress is getting ready to extend the stimulus by $26 billion. Thirty states presented balanced budgets on the expectation that Congress would extent the Medicaid FMAP provision. It’s like balancing your checkbook on the theory that your rich uncle will come through with another windfall. That analogy of course breaks down. The federal government is no ‘rich uncle’. It is sinking under $13 trillion in debt that is to be paid by taxpayers. Publicly-held debt will represent 100 percent of GDP in 2015 – in part, the courtesy of bailout fever.