The Senate has rejected an effort to prevent the federal government from rescuing states or municipalities facing a financial crisis.
The Senate mustered only 47 of the 60 votes it needed to overcome procedural hurdles to pass the measure.
Republican Sen. Judd Gregg of New Hampshire offered the proposal as an amendment to a broad financial regulation bill. Gregg said federal taxpayers should not have to bail out states that fail to be fiscally responsible. Several states face budget shortfalls, with California leading the way with deficit estimated at $19.1 billion.
Gregg's measure would have allowed aid in cases of disaster or other emergency.
Democratic Sen. Christopher Dodd of Connecticut, made an impassioned defense of the government's responsibility to provide aid if necessary.
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