Skip to comments.California Sinking - The case against a federal bailout
Posted on 05/24/2009 4:58:17 PM PDT by neverdem
CALIFORNIA FINDS itself in more than a bit of a bind: Facing at least a $21 billion budget deficit, the state could run out of money in a matter of weeks. Borrowing to help fill the hole will be challenging and expensive, given that California has the lowest credit rating of all 50 states. Last week's warning by Standard and Poor's to Britain about a possible debt downgrade will make risky government borrowing even more difficult. The state would like to see Uncle Sam pick up part of the tab; but as steeped in the bailout business as the feds have become, there are strong reasons for them to refuse to add California to the list of recipients.
This is a budget crisis that has been a long time coming. The requirement of a two-thirds vote in the legislature to raise taxes or pass a budget has exacerbated partisanship and made sensible budgeting impossible. The initiative process -- which too often allows politicians to turn the hard decisions over to voters who, surprise, aren't always willing to make them -- results in a crazy-quilt fiscal scheme whose ever-changing priorities leave it underfunded and inherently unstable. When they do make decisions, legislators have routinely elevated the interests of public employees unions over the broader interests of the state, producing crushing costs from high salaries and benefits. Temporary measures and gimmicks have been...
Bailing out the banks was defensible because of the critical and central role they play in the economy. Bailing out the auto companies may have made sense in order to save jobs -- though now that the government is heading for long-term ownership, we are beginning to doubt the worth of that policy. Bailing out the states would be an even more perilous road to start down.
(Excerpt) Read more at washingtonpost.com ...
I didn't see voters getting a chance to slash budgets and numbers of employees only to raise taxes.....LOL
I would, but the interest rate I’d charge would make Capital One’s rates look low by comparison. :)
A fiasco? That's an odd choice of words.
What it is, like Cal Prop 187, and Cal Prop 13, is arguably the biggest tax protest in modern history.
The message sent to the state, was brutal, and uncompromising.
It will be fun watching the state, and their co-conspirators in D.C. that have all but destroyed the American economy, figure there is no money left to confiscate.
Yeah, lets pretend we never heard of Ca Prop 187.
The state budget could be in balance on Tuesday morning. Start cutting pay rates, pension schemes, and programs until balance is achieved. If this takes past noon on Tuesday, then our legislature and Arnold aren’t serious.
Well hate to disappoint you WaPo: California is getting a bailout.
So you little people better open your wallets...
1. Eliminate all services to illegals except any emergency care needed to get them back to their country.
2. Privatize 2 prisons. Rinse, repeat.
3. Cut pay for all state employees making over 3,000 a month.
4. Reduce or eliminate the state capital gain tax.
5. Reduce the state income tax by 2%.
6. Reduce administrative positions in school districts.
7. Build 20 nuclear power plants in the next 20 years.
8. Eliminate legislative staff positions like the elevator operators in the capitol building.
9. Cut state and local pensions back to the level of 1998.
10. Prohibit public employee unions from contributing to those with whom they negotiate their contracts and who approve their contracts.
11. Cal spends 9,000 a year per school student. I propose we give vouchers in ten school districts for $7,000 per student. A classroom of 25 would cost $175,000 instead of $225,000. They could easily pay the teacher half of that and use the rest for admin, equipment, supplies etc.
There are 6.3 million students in Cal. If you do the entire system, you save $12 bill a year and introduce competition into the education system.
12. More oil exploration and drilling.
What do you think is going to happen when CA runs out of money?
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Here are some certainties;
1) California will not run out of cash in July.
2) Tax revenue will be used to support state government services.
3) State government largess will diminish
4) Public employment retirement benefits will diminish
5) California will continue to be a hostile environment for private enterprise.
6) Fees for routine public services will mushroom in both scope and amounts.
7) The public trust in elected officials will continue to spiral downward.
8) Both major, politcal parties will advance statewide candidates with minor philosophical differences
thats about the size of it
“CALIFORNIA FINDS itself in more than a bit of a bind: Facing at least a $21 billion budget deficit, the state could run out of money in a matter of weeks. “
Ain’t socialism great!?!?!? This (at a minimum) is what Barak wants for the whole country.
“Spend less than revenues” is a pretty basic concept that these liberals can’t seem to grasp.”
That’s because it’s never their money that they are spending. I think if there was a law that required a balanced budget in order for government employees (current and retired) to get paid, there would be a great deal more fiscal responsibility...
“Maybe the feds will guarantee Calif. bonds so they can borrow their way out of this mess?”
I believe they are already doing this w/ NJ Turnpike Authoirity and a few other muni issues. Full backing by the US Govt and at a pretty high interest rate. It’s disgraceful.
55 Electoral Votes? Another reason to break up California into three or four smaller states; maybe North, Central and South.
“The state budget could be in balance on Tuesday morning. Start cutting pay rates, pension schemes, and programs until balance is achieved.”
Just eliminate govt employee pensions alltogether — there is no justification for this when these people are making salaries that are highly competitive with private sector jobs. They enjoy extravagent benefits including top notch health insurance and generous vacation/holiday time. Why are these scabs entitled to live better than the private sector? Especially when they do so on the tab of the private sector...
Let them eat tofu.
"Bailing out the banks was defensible because of the critical and central role they play in the economy. Bailing out the auto companies may have made sense in order to save jobs -- though now that the government is heading for long-term ownership, we are beginning to doubt the worth of that policy. Bailing out the states would be an even more perilous road to start down."
“What do you think is going to happen when CA runs out of money? “
Federal Intervention (Military)
Federal take-over of the state
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.