Government Bailout Prevention Act
Sponsored By: Senator Young, Todd [R-IN]
Introduced
Summary
Bars federal bailout support for state, local, and school district borrowers that default or are likely to default after January 1, 2026. This bill would stop federal purchases, guarantees, and Federal Reserve actions intended to prop up those governments.
Show full summary
- It would bar the use of federal funds to purchase, guarantee, or provide direct or indirect grants and aid to any State, municipal, county, local government, or school district that on or after January 1, 2026 has filed for bankruptcy, defaulted, is at risk of default, or is likely to default. State includes the District of Columbia and U.S. territories.
- It would prevent the Treasury from using general fund revenues or funds borrowed under title 31 to buy or guarantee assets or otherwise assist those entities. It would also forbid any Federal Reserve Bank from lending to, guaranteeing, crediting, or buying bonds of those governments.
- It preserves a disaster-relief exception for assistance after a declared disaster and does not apply to discretionary appropriations, direct spending as defined in law, or ordinary grants awarded by the United States.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 0 benefits, 0 costs, 1 mixed.
Block Federal Bailouts for States and Cities
This bill would bar the Treasury, federal agencies, and Federal Reserve banks from aiding state, local, or school district borrowers that default or are at high risk. The ban would apply to actions on or after January 1, 2026, including buying or guaranteeing bonds, issuing lines of credit, and loan guarantees. It would cover use of general fund revenues, Title 31 borrowed funds, and Federal Reserve credit or purchases, and it would include debt restructuring activities. The bill would not stop discretionary appropriations, direct spending as defined in 2 U.S.C. 900(c), or any U.S. grants. It also would not apply to federal assistance provided after a declared disaster.
Sponsors & CoSponsors
Sponsor
Young, Todd [R-IN]
IN • R
Cosponsors
Sen. Cotton, Tom [R-AR]
AR • R
Sponsored 5/21/2026
Sen. Marshall, Roger [R-KS]
KS • R
Sponsored 6/9/2026
Sen. Crapo, Mike [R-ID]
ID • R
Sponsored 6/9/2026
Sen. Sheehy, Tim [R-MT]
MT • R
Sponsored 6/9/2026
Sen. Cornyn, John [R-TX]
TX • R
Sponsored 6/18/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov