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California begins issuing IOUs to the peons
HOTAIR.COM ^ | 7/2/2009 | Ed Morrissey

Posted on 07/02/2009 4:51:15 PM PDT by SeekAndFind

Facing a budgetary crisis of its own making, California has begun to issue IOUs instead of cash payments to at least some of its creditors. For the first time since 1992, the state government has too little cash to meet its obligations. However, Governor Arnold Schwarzenegger insisted that the state was “responsible” enough for banks to accept the IOUs at face value:

California’s controller will start paying many of the state’s bills with promissory notes as soon as Thursday after lawmakers failed to close the state’s worsening budget deficit, adding a new measure of indignity to a state sinking deeper into dysfunction. …

State Controller John Chiang said his office is prepared to issue promissory notes totaling $3.3 billion in July.

It will be the first time since 1992 that California will have issued promissory notes. The move is almost certain to further damage state’s credit rating, already the lowest of any of the 50 U.S. states, saddling taxpayers with billions of dollars in higher interest payments on bonds that have yet to be sold.

Issuing the promissory notes — formally referred to as individual registered warrants — also will have real-world consequences for those on the receiving end. Small businesses that rely on state contracts will be most affected. …

Bank of America announced Wednesday it would cash the state’s promissory notes for its customers through July 10, bank spokeswoman Colleen Haggerty said. Schwarzenegger and state officials asked other banks to do the same, noting that California has never defaulted.

“We will make those payments,” he said. “We are responsible.”

If they were responsible, they wouldn’t have to issue IOUs now. The state government has been a model of irresponsibility for the past couple of years as this utterly predictable budget crisis approached.

(Excerpt) Read more at hotair.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; News/Current Events
KEYWORDS: budget; california; economy; iou

1 posted on 07/02/2009 4:51:15 PM PDT by SeekAndFind
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To: SeekAndFind

Coming soon nationwide.


2 posted on 07/02/2009 4:54:21 PM PDT by optiguy (Government does not solve problems; it subsidizes them.----- Ronald Reagan)
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To: SeekAndFind

It will be interesting to see if taxpayers issue IOU’s to the state.


3 posted on 07/02/2009 4:54:29 PM PDT by Man50D (Fair Tax, you earn it, you keep it! FairTaxNation.com)
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To: SeekAndFind
Governor Arnold Schwarzenegger insisted that the state was “responsible” enough for banks to accept the IOUs at face value

Sure. Oh yeah. I'm certain they have a lot of faith in the state

4 posted on 07/02/2009 4:54:39 PM PDT by paul51 (11 September 2001 - Never forget)
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To: SeekAndFind

I wonder if the creditors could find anyone willing to buy up the notes for, say, 50 cents on the dollar.


5 posted on 07/02/2009 4:54:48 PM PDT by Mr Ramsbotham ("Baldrick, to you the Renaissance was just something that happened to other people, wasn't it?")
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To: SeekAndFind

Those IOUs are not worth toilet paper....where are the state-destroying liberals going to get the money?? They are driving businesses and top-earning individuals out of the state faster than they know. What goes around, comes around.


6 posted on 07/02/2009 4:55:51 PM PDT by EagleUSA
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To: SeekAndFind

Worth visiting the link to see who gets paid in cash and who gets the IOUs.


7 posted on 07/02/2009 4:56:40 PM PDT by Cicero (Marcus Tullius)
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To: Man50D

Damned straight they are (at least the smart ones). Taxpayer IOUs are in the form of increased number of withholding allowances. Why take the chance they won’t be able to pay you your refund next January? My wife and I are adjusting allowances right now so we pay the state.


8 posted on 07/02/2009 4:57:09 PM PDT by ProtectOurFreedom
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To: SeekAndFind
No State shall emit bills of credit ... nor make any Thing other that gold and silver Coin a Tender in Payment of Debts.

It's time to bring charges against the b*stards behind this for violating the oath they took to uphold the United States Constitution.

ML/NJ

9 posted on 07/02/2009 4:57:49 PM PDT by ml/nj
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To: Mr Ramsbotham

Selling your receivables (”factoring”) is very common. Don’t know if you can do it with a government warrant, though.


10 posted on 07/02/2009 4:58:05 PM PDT by ProtectOurFreedom
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To: optiguy
Coming soon nationwide.

Nope, the feds can just print more money. The states can't.

11 posted on 07/02/2009 4:58:16 PM PDT by umgud (Look to gov't to solve your everday problems and they'll control your everday life.)
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To: SeekAndFind

Meanwhile the State’s Employees will be paid with real money - no IOUs for them!


12 posted on 07/02/2009 4:58:59 PM PDT by Red_Devil 232 (VietVet - USMC All Ready On The Right? All Ready On The Left? All Ready On The Firing Line!)
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To: SeekAndFind

People always have to learn the hard way.
Years of warnings mean nothing.
Let the pain begin.


13 posted on 07/02/2009 5:02:28 PM PDT by Names Ash Housewares
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To: SeekAndFind
People who get California IOUs People California pays in cash
Grants to aged, blind or disabled persons University of California
People needing temporary assistance for basic family needs Public Employees’ Retirement System
People in drug prevention, treatment, and recovery services Legislators, legislative employees, and appointees
Persons with developmental disablities Judges
People in mental health treatment Department of Corrections
Small Business Vendors Health Care Services payments to Institutional Providers

Figure it out yet?  The people who most need cash get IOUs, while the people who could stand to operate on credit get cash.  I guess this is also “responsible”.


14 posted on 07/02/2009 5:03:11 PM PDT by annalex (http://www.catecheticsonline.com/CatenaAurea.php)
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To: ml/nj
No State shall emit bills of credit ... nor make any Thing other that gold and silver Coin a Tender in Payment of Debts.

That old document? Nobody pays attention to it anymore. It's obviously obsolete; it doesn't even allow government to perform vital roles like controlling health care and regulating carbon dioxide.

15 posted on 07/02/2009 5:05:39 PM PDT by Technogeeb (The only good Russian is a dead Russian. Rest in Peace, Solzhenitsyn.)
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To: ProtectOurFreedom

Better hurry before they pass a law that says you can’t.


16 posted on 07/02/2009 5:07:51 PM PDT by Pining_4_TX
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To: umgud

Good point. I sometimes forget to think through all of these new scenarios we now have to deal with.


17 posted on 07/02/2009 5:07:57 PM PDT by optiguy (Government does not solve problems; it subsidizes them.----- Ronald Reagan)
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To: ml/nj
Read "Constitutional Law" by James Hall, Chapter XV "Money & Banking" Section 307 "Bills of Credit." In 1915, it was clearly legal for states to issue such warrants without violating the U.S. Constitution.
18 posted on 07/02/2009 5:09:01 PM PDT by ProtectOurFreedom
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To: Pining_4_TX

Excellent point. I wouldn’t put it past them to even try to pass a law to retroactively revert you to prior withholding levels if you made an adjustment after 1/1/09.


19 posted on 07/02/2009 5:17:18 PM PDT by ProtectOurFreedom
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To: Red_Devil 232
Partially right.

Those paid with registered warrants:
http://www.sco.ca.gov/5919.html

Those not:
http://www.sco.ca.gov/5917.html

Note: regular paychecks are also called warrants also.

20 posted on 07/02/2009 5:17:50 PM PDT by NathanR ( Obama: African Colonial,)
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To: Mr Ramsbotham
-- I wonder if the creditors could find anyone willing to buy up the notes for, say, 50 cents on the dollar. --

The Bank of America is saying it will buy them dollar for dollar.

21 posted on 07/02/2009 5:22:03 PM PDT by Cboldt
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To: ProtectOurFreedom
Don't tell me about reading some cr@p written in 1915. YOU read the Federalist Papers (No. 44) where Madison says, that the clause I quoted was intended to protect the people from "the pestilent effects of paper money." (You might also read Vieira's Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution; A Study in Constitutional Law.)

ML/NJ

22 posted on 07/02/2009 5:22:19 PM PDT by ml/nj
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To: ml/nj

Right. I’m sure all you’ve got in your wallet are pieces of eight. Numerous articles on the web says the “emit bills of credit” part of Section 10 is not operative. Just the way it is.


23 posted on 07/02/2009 5:26:37 PM PDT by ProtectOurFreedom
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To: ml/nj
-- No State shall emit bills of credit ... --

As far as I know, the constitution is whatever the courts might say it is, tomorrow. Precedents are out the window on the 2nd amendment, I presume precedents are out the window for everything else, now that we are a nation of men, rather than a nation of laws.

The U.S. Constitution Online

An interest-bearing certificate that was issued by Missouri, and usable in the payment of taxes, was thus ruled to be an unconstitutional bill of credit.

24 posted on 07/02/2009 5:27:51 PM PDT by Cboldt
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To: SeekAndFind

I for one am getting tired of being peod on.


25 posted on 07/02/2009 5:29:39 PM PDT by RichInOC (No! BAD Rich! (What'd I say?))
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To: ml/nj
-- No State shall emit bills of credit ... --

But seriously, I think IOU's are not the same as a "bill of credit." A bill of credit is the creation of money out of thin air. The entity that performs that function in the US is a private corporation known as "Federal Reserve."

Bills of Credit are non-interest-bearing government obligations that circulate as money.

26 posted on 07/02/2009 5:34:29 PM PDT by Cboldt
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To: ProtectOurFreedom
Section 10 is not operative

How nice! Not operative! And from a supposed FReeper too.

Is there anything in the Constitution that you do consider "operative," PAL?

ML/NJ

27 posted on 07/02/2009 5:34:46 PM PDT by ml/nj
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To: SeekAndFind

I assume the IOUs are for people/companies doing business with the state government..

Seems to me they deserve everything they get for doing business with a corrupt criminal entity, that aids and abets illegal aliens, while forcing the legitimate working men and women to pay for it.


28 posted on 07/02/2009 5:40:53 PM PDT by dragnet2
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To: SeekAndFind
From another article:

Voters delivered a crushing blow to the state finances in May, when they rejected five ballot proposals that would have eased the budget strain.

Too bad

Who is affected

To save money for education and debt payments, Chiang plans to withhold $424 million that would go for state operations, primarily to vendors, as well as another $141 million in payments to small businesses.

Doing business with a corrupt government, that aids and abets illegals aliens while forcing law abiding tax payers to pay for it. Serves them right!

Lots of pain. We need more.

29 posted on 07/02/2009 5:51:03 PM PDT by dragnet2
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To: dragnet2

Cool.

So can we do this also?

Can I stop my witholdings to the Feds, and send them IOU’s instead?


30 posted on 07/02/2009 5:51:19 PM PDT by Pikachu_Dad
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To: ml/nj
How nice! Not operative! And from a supposed FReeper too.

You'd be lucky to find a remnant of people anywhere who have both read the Constitution and actually believe in what it says.

But try to have a bit of compassion for those who fail to meet that standard; too many people aren't ready to admit that the Republic is dead and that their government is merely a shell of legitimacy filled with vile corruption worse than any decent person could imagine.

Just look at the depths to which they are willing to sink to maintain their cocaine supply.

31 posted on 07/02/2009 5:54:28 PM PDT by Technogeeb (The only good Russian is a dead Russian. Rest in Peace, Solzhenitsyn.)
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To: ProtectOurFreedom
-- Numerous articles on the web says the "emit bills of credit" part of Section 10 is not operative. --

If that means that the CA IOU's are not bills of credit, I agree. But it would be false to say that states are free to emit bills of credit. If a state started issuing notes/money -outside of the federal banking system- they would be shot down, pronto.

Dense reading, but see Craig v. Missouri, 29 U.S. 410 (1830).

Easier reading, and additional case citations at, "Bills of Credit" from The Constitutional Law Of The United States, by Westel Woodbury Willoughby (1910).

32 posted on 07/02/2009 5:55:13 PM PDT by Cboldt
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To: ml/nj

Just relaying what the Law Professor wrote in 1915. That’s all. I didn’t personally nullify that clause.


33 posted on 07/02/2009 5:59:49 PM PDT by ProtectOurFreedom
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To: Technogeeb
But try to have a bit of compassion for those who fail to meet that standard; too many people aren't ready to admit that the Republic is dead and that their government is merely a shell of legitimacy filled with vile corruption worse than any decent person could imagine.

You bet..

Been coming a long time now...The clues being obvious.

A government that wont secure and protect it's own sovereign legitimate borders, will itself, eventually become illegitimate.

Like flooding the county with billion in counterfeit currency, backed by nothing...

These are country killers.

34 posted on 07/02/2009 6:03:26 PM PDT by dragnet2
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To: Man50D

Time for California to secede and then print their own money.


35 posted on 07/02/2009 6:04:17 PM PDT by Aroostook25
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To: Cboldt

As a State California could mint gold and silver as money. The California dollar could be one gram of Silver (31 grams to an ounce).


36 posted on 07/02/2009 6:07:01 PM PDT by Aroostook25
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To: SeekAndFind

one of the state senators has a bill to allow joe-sixpack to send the State of California an IOU whenever the citizen receives an IOU from the state...an offset.

Does anyone have the bill number?


37 posted on 07/02/2009 6:26:43 PM PDT by pointsal
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To: ProtectOurFreedom
Just relaying what the Law Professor wrote in 1915. That’s all. I didn’t personally nullify that clause.

What you did is known a an "appeal to authority" which is a type of fallacious argument. You could also tell me what Barney Frank said or what Obama said as if it had some merit.

ML/NJ

38 posted on 07/02/2009 6:35:21 PM PDT by ml/nj
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To: ml/nj
Wikipedia, the final authority: "...no state may make anything (such as Federal Reserve Notes) but gold and silver coin a tender in payment of debts. This requirement that states use only gold and silver coin, while technically still the law of the land, is ignored and has no effective power."
39 posted on 07/02/2009 6:41:46 PM PDT by ProtectOurFreedom
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To: ProtectOurFreedom

The people allowed the chains on government to rust away through neglect;and for long years the beast was content to bide its time ,snapping up only the unwary fringes of society;but now the beast is about to devour the whole country.


40 posted on 07/02/2009 7:00:46 PM PDT by hoosierham (Waddaya mean Freedom isn't free ?;will you take a credit card?)
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To: SeekAndFind

A Kalifornia IOU and a quarter will get you a cup of coffee.


41 posted on 07/02/2009 7:03:46 PM PDT by Sig Sauer P220 (Forget going Galt. Its time to go Braveheart.)
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To: SeekAndFind

Arnold is just too funny.

“We will make those payments,” he said. “We are responsible.”

If “WE” were responsible this state wouldn’t be in the crapper!


42 posted on 07/02/2009 7:18:51 PM PDT by oldteen
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To: annalex

Your chart of who get cash and who gets IOUs is very troubling. Thanks.

I notice that Bank of America “took the lead” in saying they would accept these IOUs. I wonder if there is any relationship of this willingness to their decision two or three years ago to grant credit cards to people who are illegals and had no way to prove income, etc...


43 posted on 07/02/2009 8:11:54 PM PDT by AFPhys ((.Praying for President Bush, our troops, their families, and all my American neighbors..))
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To: hoosierham

We let the commies and leftists take over education and teach last two generations of youth. Friedman in the introduction to “The Road to Serfdom” says the WWII generation came home very knowledgeable about the perils of totalitarianism having fought it during the war. That generation with that personal experience is passing on. Today’s generations do not know of the threat posed by tyrants — it would be an abstract concern taught to them by schools, if only the teachers believed tyranny was a threat.


44 posted on 07/02/2009 9:28:34 PM PDT by ProtectOurFreedom
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To: AFPhys

The chart is from the source article.


45 posted on 07/02/2009 10:25:11 PM PDT by annalex (http://www.catecheticsonline.com/CatenaAurea.php)
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To: ProtectOurFreedom
Wikipedia, the final authority

Everyone needs a good laugh in the morning.

ML/NJ

46 posted on 07/03/2009 3:55:44 AM PDT by ml/nj
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