California Nightmare: All The Voters are Mad, and the Ink is Red

Megan McArdle at the Atlantic says it's time for California and the nation to face facts: the state is bankrupt with a capital BANKRUPT:

California is completely, totally, irreparably hosed….Their outflow is bigger than their inflow. You can blame Republicans who won't pass a budget, or Democrats who spend every single cent of tax money that comes in during the booms, borrow some more, and then act all surprised when revenues, in a totally unprecedented, inexplicable, and unforeseaable chain of events, fall during a recession. You can blame the initiative process, and the uneducated voters who try to vote themselves rich by picking their own pockets. Whoever is to blame, the state was bound to go broke one day, and hey, today's that day!….

We could let them go bankrupt.  And we probably should.

I am not under the illusion that this will be fun.  For starters, the rest of you sitting smugly out there in your snug homes, preparing to enjoy the spectacle, should prepare to enjoy the higher taxes you're going to pay as a result.  Your states and municipalities will pay higher interest on their bonds if California is allowed to default….On the other hand, I don't really see another way out of it.  If Uncle Sugar bails out California, California will not fix its problems. 

Matt Welch and Tim Cavanaugh, both former L.A. Timesmen, have been blogging up a storm on California's recent special election in which Sacramento's fiscal shenanigans were no-goed by those troublesome pests, The People. I blog on L.A. and Cali politics and ongoing fiscal crises over at KCET.org's City of Angles blog. And Reason magazine's May cover story is on how state fiscal difficulties are pretty much the fault of foolish profligacy by state governments, with cover boy honors fully and totally earned by Cali's own Governor Arnold Schwarzenegger.

Comments

[EJM]

...with a capital BANKRUPT.

(Insert obligatory WoF reference here.)

[Ripley]

I say we take off and nuke the entire site from orbit.

IT'S THE ONLY WAY TO BE SURE.

[Invisible Finger]

Environmentalists should be happy. The government won't be able to create more energy-wasting buildings and won't be able to repair the greenhouse-gas-inducing roads so people will drive less.

Think any of them will admit that global-warming was caused by the credit bubble? Back in the good ol' economy-battered 70's, the fear was the coming ice age.

[Brandybuck]

Game over man! GAME OVER!

[ed]

"unforeseaable chain of events"

Things are so bad they can't afford spellcheck!

[Hal]

I think this story is one of the items that drove down the stock market today frankly. Though I don't hear anyone else mentioning it. You know investors are thinking in the back of their minds, "Oh crud, now the FED is going to bail out California too. What's next?" Top that off with a host of foreign countries doing what they can to get out of the dollar and you can say good buy greenback.

Probably explains what happened to gold today. I just check the 24hour graph on the widget I use, ExactPrice, to track the precious metals and that's a pretty steep climb that started this morning.

Looks like people are looking to hedge against a dollar that's looking more like a zombie at this point.

[Aresen]

If the Federal Government bails out California, who is going to bail out the Federal Government?

[Pro Libertate]

Canada?

Oh, sorry Aresen.

I just checked--the Canadian dollar is almost on par with the dollar (1 Canadian dollar = 0.876885 U.S. dollars). Wow.

[Gene Berkman]

California is facing a deficit of $42 billion - 4 times the deficit it had when voters replaced Gray Davis with Arnold Schwarzenegger.

But the California deficit is dwarfed by the federal deficit - in numbers (42 billion vs 1.9 billion) and in percentage (30% vs 46%)

California taxpayers pay at least three times as much in taxes to the federal government as they do to the state of California.

Establishment commentators, major newspapers and "progressive" Democrats all say California's budget problems are made worse by a 2/3 requirement ot pass the budget, and a 2/3 requirement to pass tax hikes. The federal government does not have those limitations, and the feds are in far worse shape financially than California.

[Gene Berkman]

It should read: But the California deficit is dwarfed by the federal deficit - in numbers (42 billion vs 1.9 Trillion)

I guess I should proof read before posting.

[Mike]

17 days! They won't last 17 hours!

[Inspector Fu]

California needs its own 'we are the world'

[LarryA]

In 1960 my Dad got us out of California mainly because most high school graduates didn't have the math necessary to work in a bank.

I'm surprised it took this long.

[R C Dean]

If the Federal Government bails out California, who is going to bail out the Federal Government?

Mr. Inflation, that's who.

[James Anderson Merritt]

# LarryA | May 22, 2009, 1:03am | #
# In 1960 my Dad got us out of California
# mainly because most high school graduates
# didn't have the math necessary to work in a
# bank.

And yet the mid-sixties through the mid-70s are remembered as the golden age for California public education, the yardstick of performance against which we measure the current system (for which we in California spend almost twice as much in inflation-adjusted dollars as we did back then).

I recall getting a fairly decent education from California public schools (all the way through Cal Poly and UC Berkeley) in the 60s, 70s, and 80s (though I never liked being in school at all, prior to college). But I will admit that, even then, the fundamental training they provided didn't 't seem to rise to the level elementary and secondary students received at the beginning of the 20th century. Perhaps that was what disappointed your Dad.