WASHINGTON - Sen. David Vitter, R-La., tried unsuccessfully Thursday to pass a measure that would bar a federal bailout for Detroit or any other bankrupt city, state or county. He did so under a process requiring unanimous consent, and Michigan's two Democratic senators objected - blocking a vote. Vitter could continue to seek passage, but prospects are slim in...
WASHINGTON - Sen. David Vitter, R-La., tried unsuccessfully Thursday to pass a measure that would bar a federal bailout for Detroit or any other bankrupt city, state or county.
He did so under a process requiring unanimous consent, and Michigan's two Democratic senators objected - blocking a vote. Vitter could continue to seek passage, but prospects are slim in the Democratic controlled Senate.
In his remarks, Vitter said the American people are tired of bailouts after taxpayers bailed out banks, financial institutions and auto companies following the 2008 economic collapse.
"When you look at situations like Detroit - the largest ever municipal bankruptcy - and when you look at our fiscal situation in Washington at the federal level, it's clear that this bar against bailing out state and local government is very, very much needed," Vitter said.
Sens. Carl Levin, and Debbie Stabenow, both Michigan Democrats, objected to the Vitter bill, saying that Detroit, which filed for bankruptcy last week, hadn't requested a bailout.
"I'm proud to have been living in Detroit all my life. It doesn't need this kind of, ladies and gentlemen, poking -- legislation poking at it to stop Detroit from getting something it hasn't applied for," Levin said. "I know this legislation was introduced before this bankruptcy of the city of Detroit but in this context, in this moment to be seeking unanimous consent to pass legislation, apparently without even a hearing, it seems to me beyond the pale."
Vitter's State Bailout Prevention Act would bar the Federal Reserve from providing assistance to, or creating a facility to help, any municipality, county or state. The bill also prevents Congress and the Treasury Department from bailing out states or local governments through legislation
Vitter said he understands opponents of his legislation are saying there's been no request for a federal bailout from officials in Detroit and Michigan.
"That's true so far, but when the mayor (Detroit Mayor Dave Bing) talked to the Wall Street Journal about this he quote 'left the door open' for a federal bailout after the city's bankruptcy filing. When asked directly whether Detroit would seek a federal bailout, Mayor Bing said, 'not yet.' Similarly, the governor of Michigan, (Rick Snyder) didn't support a bailout but said on Face the Nation 'if the government wants to do that, that's their option.'"
Levin said Vitter bill contains language that would not only prevent federal aid for bailout communities, but block other routine federal aid, as well, for them.
"It is no coincidence that the senators from Michigan are here on the floor because we are the most current victim of this language, if it were ever to pass," Levin said. "There are others -- hundreds of others who would be victimized by this language because of its breadth."
Vitter said his bill is only aimed at bailouts or helping prevent governments from going into bankruptcy. Routine aid is not impacted by his bill, he said.