Jean Ross of the California Budget Project is something of a hero around these parts. The work of the CBP in speaking up for the lower tiers of our economic strata has been nothing short of life-saving.

Today, she makes the argument in the San Diego U-T to their question of whether the federal government should bail out California. As Robert mentioned earlier, “bailout” isn’t really a great term, descriptively or framing-wise. Nonetheless, the question was out there, and Jean did a great job answering why California really is too big to fail.

Many states are reeling from fiscal problems, but California has itself to blame for its dysfunction, much of which has been brought about through voter-approved initiatives dating back to the passage of Proposition 13 in 1978.

Yet the rest of the country cannot afford to stand by idly as the Golden State drowns in red ink. In the same way that the federal government has deemed Chrysler, General Motors and the nation’s largest banks and financial corporations too big to fail, California – the world’s eighth largest economy – is too big and too important to the nation for failure to be an option. Since World War II, the state has been an economic driver of the country. A fiscal meltdown in California would have reverberations throughout the country and the world.

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What form might that assistance take? A direct infusion of cash, of course, would be desirable. However, if federal officials don’t trust California to spend wisely – and there are plenty of reasons to be doubtful – Washington could further increase its investment in health programs such as Medi-Cal and the Healthy Families Program, where the federal government already pays the majority of costs.

To leave California to flounder would hinder not only the future of the state’s economy, but the national and potentially even the global economies as well. California is and will be the economic engine of the nation’s future – a hotbed of innovation and a 38 million-strong market whose purchasing power will be needed to turn recession into expansion.  

The thing about the Governor’s May revise is that it is as much for the feds as it is for our legislature.  He’s trying to reposition the gun that the Republicans have been holding at the head of the Democrats and the state in general and aim it directly at President Obama.  

Take CalWORKS, for instance.  Quite frankly, I really doubt that even Arnold Schwarzenegger is so short sighted as to refuse a program that pulls down roughly triple what it costs in federal dollars and provides the backbone of the social safety net. Now, I’m sure many of the Yacht Party stalwarts are all about that.  But, Arnold, no, I think this all comes back to the issue of getting the federal government to waive state spending requirements.  So, perhaps Arnold is playing some strange game of chicken with the feds in an effort to steal some federal dollars.

Essentially Arnold is just using the old hostage ploy. In many ways, California has the future of the American economy in its future.  The fact is that the rest of the nation needs a strong California. If California fails, the rest of the nation better get ready for some pretty austere days to come. Perhaps I’m giving Arnold too much credit here, but this is some serious fire that he’s playing with now whether he’s bluffing or not.

Now, Schwarzenegger knows all this, Speaker Pelosi knows this, and frankly, so does President Obama. It’s just unclear as to who is going to blink first.