Illinois to Congress: Don’t bail us out

President Obama and Congressional leaders will receive a letter from Illinois this week. Washington is urged to not bail Illinois, or any other state, out of debt. Last May, Senator Mark Kirk introduced a resolution in the U.S. Senate to put end federal bailouts of states. His reasons were simple and clear. The Federal government...

President Obama and Congressional leaders will receive a letter from Illinois this week. Washington is urged to not bail Illinois, or any other state, out of debt.

Last May, Senator Mark Kirk introduced a resolution in the U.S. Senate to put end federal bailouts of states. His reasons were simple and clear. The Federal government grows deeper in debt by the day. Its credit rating has been downgraded. A bailout of states would further endanger federal finances and, ultimately, our national currency.

Illinois House Resolution 720 was modeled after Kirk’s Senate measure and introduced by state Rep. Renee Kosel and adopted by the full House late last week. The Illinois Policy Institute was supportive of the effort. I had the opportunity to offer committee testimony on the bill. Below, I elaborate on some of the thoughts I offered while testifying.

Illinois’ problems are its own
Illinois has the tools to fix its finances. The state is seeing record reviews. Pension reform and Medicaid reform are possible, and there are concrete ideas to fix these debt-ridden programs.

The prospect of a federal bailout only forestalls those solutions
If a federal bailout is considered imminent – or even possible – then the urgency to actually solve our problems ourselves is diminished. This resolution sends a message throughout state government that a bailout is not a solution that the State of Illinois can plan on.

More important, this sends a signal to the markets
Even with record revenues, the state of Illinois saw its credit rating downgraded because the structure of its budget remains unchanged, unreformed. HR720 sends a signal to the markets that Illinois plans to deal with its problems itself. I would point out that Greece received a bailout via debt swap from EU member countries earlier this year, and Moody’s downgraded – downgraded – Greece’s credit as a result, seeing the latest bailout effectively as a default by Greece on its debt.

The people of Illinois do not want a bailout. This would send a signal to them.
In May 2011, the Institute commissioned a poll that included a question on federal bailouts. Five hundred registered voters were asked, “Should the federal government provide bailout funding for states with serious financial problems?” By a 56 to 28 percent margin, Illinois voters said “No.”

Additional thoughts
The House resolution follows on comments from Gov. Quinn’s budget spokesperson that Illinois will not seek a federal bailout – an unequivocal claim that reflects a new mode of thinking in Illinois. Senator Mark Kirk deserves special credit for leading on this issue. This resolution should help his national efforts to end federal bailouts, and it should close a chapter in Illinois history when too many people remained idle while hoping for a federal check that would balance our books.