The Government Bailout Prevention Act would prohibit the federal government from using taxpayer money to help state and local governments or school districts that are in financial trouble. Specifically, the bill blocks the Treasury Department, Federal Reserve, and other federal agencies from purchasing bonds, providing loans, guaranteeing debt, or offering any other financial assistance to states, cities, counties, or school districts that have defaulted on their debts, filed for bankruptcy, or are at risk of doing so since January 1, 2026. The prohibition does not apply to federal disaster relief or regular grant programs that are already authorized by Congress. The bill affects state governments, municipalities, counties, school districts, and other local government entities, essentially forcing them to manage their own financial crises without federal bailouts. No specific funding or timeline is included in the legislation beyond the January 1, 2026 trigger date for when these restrictions would apply.
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