We had, and continue to have, an unfortunate situation where a good deal of our staff, including myself and Robert, were out of town at a crucial time for California and its budget problems. Robert will return at the end of the month. For myself, it’s good to be back and delving into this all again.
I have about 30 posts I want to write about the developments of the past week and a half, but I want to try and alleviate the confusion over that Washington Post article stating that the Obama Administration spurned a request for aid for the state. Outside of Zoe Lofgren, a Congresswoman, nobody is named in this request, nor is the request defined. It refers late in the article to one letter from Bill Lockyer to Tim Geithner that appears to reference federal loan guarantees, which is, again, not a bailout. And the Governor has tried to rule out borrowing to deal with the cash crisis anyway. So I question whether anyone has discussed any kind of dollar transfer from the federal government to California at all. I think this article hangs on an extremely thin reed.
Now, I do think the government should consider offering loan guarantees, to stop the gouging of California going on from Wall Street. But I do not think that California progressives should WANT a “bailout” in the more traditional sense. It sounds like it would be a nice and tidy solution, and maybe the strings attached could make it easier for the state to get its business done. But that’s very speculative, and so we have to consider who such a solution would bail out. Clearly, it would bail out the failed Democratic legislature for refusing to lead and take a long-term view on reforming the state governmental process to allow a return to stability. We know that, with revenues dropping like a rock, in six months the projections will fall short again. They have for about 15 straight months. Which means what, another bailout? That simply isn’t a long-term, sustainable solution. Some may say that it would keep the poor from dying, but it seems to me it would only delay such an outcome. Heck, we know that California last issued IOUs during a budget crisis in 1992, during a MILD recession. The structure of state finances simply means that we will lurch from crisis to crisis forever without a permanent fix.
We have solutions and we know what they are; there’s really no mystery, other than the fact that legislative Democrats refuse to dare speak their name. A federal band-aid would delay those solutions once again, as they have been delayed for 30 years. We simply will never fix this if we keep deferring the California dream and persuading others to mop up the mess caused by failed leadership.
More generally, a while back on Calitics (can’t find it right now) I argued for a permanent federal fiscal stabilization fund that could be tapped if deficits hit a certain percentage. States could contribute with a federal match at 6:1 or something. We need to permanently end the paradox of state budget cuts during an economic downturn, and it should not be a stopgap fix. If people want the federal government to help, it should be mechanized and durable, and enhance economic recovery by kicking in when recovery is needed.
This may be a contrarian view, but I think a bailout would delay the changes desperately needed, nor would it even help the most vulnerable in society over the long-term or even the short-term. We need to deal with the problem at hand.
that Republicans win every time, because they are willing to let the government fail and close and the Democrats are not.
Very interesting that the industries we threatened with tax increases which their money defeated paid plenty more money to promote tax increase on us!
The entire California government seems like a failed organization to me. We elect the same people over and over and nobody holds them accountable. It’s ridiculous, and most people don’t even know who their reps and senators are. The governor is elected in a popularity contest based on him being a movie star.
We need a smarter class of citizen again, really.
or involvement in finding a solution to the California Crisis.
It’s not about a bailout at this point. It’s about federal recognition that California is an integral part of the United States of America, something our rulers and representatives seem to have forgotten.
The crisis is such right now that if things are allowed to continue devolving the way they’re going, the destruction and loss of life is going to be as bad as — if not worse than — that of Hurricane Katrina, and the federal culpability in letting it happen will be if anything worse.
It is unconscionable to simply stand on the sidelines, the way DC is doing. It is unconscionable.
They should be involved, from the White House on down, in helping Californians to find a solution — an immediate fix so that people dying in the streets isn’t normalized, and then a long term revision to California’s governance that mitigates against this sort of monstrous crisis happening again. The Feds should be involved right now; they should have been involved long ago.
It’s not about a bailout.
It’s about preventing the collapse of California’s state government in the short term, and getting it back to fiscal and governmental health in the long term.
Doing that is in the interests of all Americans, not just Californians.
Where did the feds get the idea that doing nothing was the preferred option?
I must admit that I am somewhat mixed on the federal assistance question.
For the time being there are few good solutions for the short-term crisis. That, I think, is what’s drawing Dems to this idea. But, some of the strings look very unlikely to actually be accepted anyway by the voters.
Long-term, we need to fix Prop 13 and the state constitution. Short term, we have to deal with our problems here.
It would help if the administration said that there is no possibility of help unless the state has a budget that maximizes the use of available Federal Funds. It would also have to include an increase of Revenues by returning taxes to their historic rates,i.e. Income Taxes to 10% & 11% and VLF back to 2%.Plus the package would have to have the 2/3rds for Taxes and Budget on the Nov 2010 ballot.Then the Feds would agree to supply funds to smooth out cashflow(in place of RAWs)to be repaid in the future.