EXCLUSIVE: Senate Republicans propose allowing states to redirect federal funds to debt reduction

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Senate Republicans will introduce legislation Thursday to allow state and local governments to redirect federal government grants they receive to go toward paying down the growing national debt instead.

In particular, the bill would ensure that Democratic-led blue states don't end up receiving federal funds that red states have rejected.

GOP Sens. Cynthia Lummis of Wyoming and Rick Scott of Florida are set to introduce the Pay Down the Debt Act of 2021 to give state and local leaders the power to take concrete steps to reduce the federal debt.

“We are on an unsustainable fiscal trajectory, and at present, states and localities are powerless to do anything about it,” Lummis said to the Washington Examiner.

“Through our bill, state and local leaders would be able to take unused or unnecessary funds that they have been awarded by the federal government and redirect those funds to address our $28 trillion national debt. If we do not start paying our debt now, our grandchildren will have to pay it later,” she said.

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Republicans have increasingly been wary as Congress spent nearly $4 trillion in pandemic relief last year while the Biden administration is gearing up to spend trillions more.

In April, Senate Republicans, led by Lummis, introduced legislation to create a new bipartisan national commission to reduce the deficit and balance the federal budget within 10 years.

Lummis and Scott point to President Joe Biden's $1.9 trillion American Rescue Plan as an example of government spending that states have partially opted out of. Many Republican states have now turned down the extra unemployment payments included in the law.

Another example occurred in 2011, when the Obama administration, led by then-Vice President Joe Biden, awarded $2 billion in grants for a high-speed rail program in California after Scott, who was Florida's governor at the time, refused to take the money from the federal government for his own state's fast-train project.

Republican governors from Ohio and Wisconsin also rejected the federal grants in order to signal their fiscal discipline and score political points.

The high-speed trains initiative did not come to fruition. Former President Barack Obama's transportation secretary at the time, Ray LaHood, recently said it was a significant failure.

Scott and other Republicans say they don't want the erroneous spending from the railway project to be repeated again.

“Our nation is nearing $30 trillion in debt, and President Biden and the Democrats continue to spend American taxpayer dollars with reckless abandon,” Scott said to the Washington Examiner.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

“Our bill promotes fiscal responsibility by allowing them to redirect grants they receive from the federal government, like the hundreds of billions in bailouts allocated by the Democrats’ American Rescue Plan, toward reducing federal deficit spending,” he added.





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