To prohibit the provision of Federal funds to State and local governments and school districts for payment of obligations, to prohibit the Federal Reserve banks, the Department of the Treasury, and other Federal agencies from financially assisting State and local governments and school districts that have defaulted on their obligations, and for other purposes.
About This Bill
Committee
Latest Action · June 15, 2026
Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
The Government Bailout Prevention Act would prohibit the federal government from using taxpayer funds to bail out state, local, or county governments and school districts that have filed for bankruptcy or defaulted on their financial obligations. The bill would also prevent the Federal Reserve and Treasury Department from providing loans, loan guarantees, or purchasing bonds from these struggling government entities. The restrictions would apply to any jurisdictions that have defaulted, are at risk of defaulting, or would likely default without federal assistance, applying retroactively to situations occurring after January 1, 2026. The only exception to these prohibitions would be federal assistance provided in response to presidentially declared disasters. This legislation is intended to ensure that state and local governments are financially responsible without the expectation of a federal rescue, though it would still allow general federal grants and appropriations to continue.
Take Action
Your position
Add a comment
to comment on this bill.
Annotate the text
Highlight any passage on the Summary or Full Text tab to attach a note. Annotations appear on the Annotations tab.