Does the Country Need Another Bailout?

The Senate cleared the way for a $26 billion bailout package for the states and school districts Thursday. The vote was 61 to 38, with Republican Senators Susan Collins and Olympia J. Snowe from Maine joining the Democrats. This came after months of blocking tactics by the Republicans. Unlike the stimulus, the bill will not increase the budget deficit since it is paid for with spending cuts and tax increases on U.S. companies operating overseas.

Democrats have said the bill, which will grant $10 billion to teacher aide and $16 billion to Medicaid, is necessary to avoid teacher layoffs and cutbacks in cash-strapped states. Thomas Schatz from Citizens Against Government Waste joined Varney & Co. to weigh in on the bill. “[The bill] is for the states who have mismanaged their own money. The states that will not make the cuts necessary to keep these jobs for teachers and are running to Washington with their hands out saying ‘please help us,’” said Schatz.

Some are questioning whether a $26 billion bailout package will help the economic recovery. “There should be changes and there should be strings attached to this kind of spending but there’s nothing,” explained Schatz. “It’s just simply to pay teachers, and nothing in terms of merit pay or any restrictions or any kind of education reform.”

The bill will be put in front of the House of Representatives to grant final approval. House Speaker Nancy Pelosi is calling House lawmakers back to Washington next week from their summer recess to vote on the bill.