Posted on 05/04/2005 12:57:46 PM PDT by SmithL
The single most graphic symbol of the Capitol's utter dysfunction - its chronic inability to respond to reality and reason - is the immense public debt that politicians have amassed in the last four years to pay for their foolish budget decisions.
The state received a one-time, $12 billion windfall of income taxes in 2000. Then-Gov. Gray Davis and legislators of both parties blew most of it on permanent spending and tax cuts that could not be sustained when revenue returned to normal, creating a "structural deficit" of around $8 billion a year.
Squandering the windfall was a monument to the lethal combination of ideological imperatives, special-interest pressures and single-purpose budgetary laws that afflicts the Capitol. But what followed was even stronger evidence of the Capitol's fundamental collapse.
Rather than fess up to their huge error, and rectify it with spending cuts or tax increases, Davis and lawmakers began running up the state's credit cards to cover the deficit. Democrats resisted spending cuts, while Republicans opposed tax increases. Since each party had veto power, the only way they could write budgets was to borrow ever-larger amounts of money.
They shifted money out of special state funds, borrowed from banks, tapped local government treasuries and engaged in Enron-like accounting tricks that borrowed money off the books. The official debt accumulated so far is at least $25 billion, and there may be an additional $10 billion in backdoor debt.
(Excerpt) Read more at sacbee.com ...
Cut!
Cut!
We have the same at the Federal level
http://www.freerepublic.com/focus/f-news/1396732/posts
One would think financial houses love to service this debt.
Love how they try to pin half the blame on Republicans. Democrats run this state from top to bottom. If the Republicans hadn't opposed tax increases, we'd still be in the exact same situation, except with higher taxes (i.e. the Dems still would have spent everything and then some)
Davis's borrowing was hung up in court where he would have lost the issue.
If Republicans hadn't sponsored a Constitutional Amendment and $15 Billion more in debt to pay for general operating expenses, they would have had to cut and we'd be back on the road to recovery. As it is, they just postponed the problem and now think borrowing is the solution to all ills.
It set a very bad precedent. Republicans deserve at least half the blame.
And this is different from the Fed how?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.