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Bill

HR 9324

Government Bailout Prevention Act

119th Congress Introduced by Pat Harrigan and 3 co-sponsors

Prohibits using federal funds to pay state/local debts and bars federal financial assistance to jurisdictions that have defaulted on obligations.

Introduced in House
0
WeVote Research Nonpartisan
Bill Summary · HR 9324

Bill overview

  • Name and purpose: HR 9324, introduced in the 119th Congress, proposes to prohibit the use of federal funds to state and local governments and school districts for payment of obligations. It also seeks to bar 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, along with other associated provisions.
  • Sponsorship: Primary sponsors are members of the House Republican caucus, with three co-sponsors listed: Scott Perry, Keith Self, and Greg Steube.

What the bill would do (key provisions)

  • Federal funding prohibition: The bill would restrict the provision of federal funds to state and local governments and school districts for the purposes of paying their outstanding obligations. In other words, it would prohibit using federal dollars to satisfy debts or other financial obligations issued by these governments/entities.
  • Financial assistance prohibition for defaulting entities: The bill would prohibit Federal Reserve banks, the Department of the Treasury, and other federal agencies from providing financial assistance to state and local governments and school districts that have defaulted on their obligations.
  • Scope of “obligations”: The term “obligations” likely encompasses debt instruments and other financial liabilities issued by subnational governments and school districts, though the bill’s text would need to be consulted for precise definitions.
  • Additional provisions: The bill’s title suggests “and for other purposes,” indicating there could be ancillary or related measures, potentially addressing administrative or enforcement aspects, reporting, or related policy tools to deter default or constrain federal support.

Who would be affected

  • State governments and local governments: Entities that issue bonds or other debt and rely on federal funds or federal support could be directly affected, especially if they have defaulted or are at risk of default.
  • School districts: Local education agencies that issue debt or rely on federal financial support could be constrained in accessing federal funds to meet obligations.
  • Federal agencies and institutions: The Federal Reserve banks, the Department of the Treasury, and other federal agencies could be restricted from providing financial assistance to defaulting subnational entities.
  • Potential beneficiaries of relief: Any programs or mechanisms that previously used federal funds to support debt service or obligations at the subnational level might be limited or redirected.

Procedural and timeline aspects

  • Introduction and referrals: The bill was introduced in the House and referred on 2026-06-15 to the Committee on Oversight and Government Reform, and in addition to the Committee on Financial Services, for consideration of provisions falling within each committee’s jurisdiction.
  • Next steps: The committees would review, possibly amend, and vote on the bill before sending it to the full House. If reported, it would proceed to floor consideration, potentially followed by a Senate counterpart or further legislative action. The exact timeline would depend on committee activity and legislative priorities.

Potential implications and considerations

  • Fiscal impact: By restricting access to federal funds for debt payment, the bill could affect the credit risk, interest costs, and liquidity of state and local governments and school districts, potentially influencing their borrowing costs and fiscal flexibility.
  • Compliance and enforcement: Implementing the prohibitions would require mechanisms to determine default status and to prevent federal funding from being used to satisfy obligations, as well as potential audit, reporting, and enforcement provisions.
  • Policy tension: Supporters may view the bill as reinforcing fiscal responsibility at the subnational level, while opponents may raise concerns about crisis scenarios where withholding funds could impair essential services or destabilize local economies.

Note: This summary reflects the information available in the bill description and action history. For a complete understanding, reviewing the full text of HR 9324, including definitions, exceptions, enforcement provisions, and any amended language, is recommended.

Compiled from official sources — confirm details with the bill’s official record.

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