It’s looking increasingly likely that California will get bailed out by the federal government. The Golden State is $70 billion in the hole. Analysts expect that figure to reach $150 billion within four years — and that’s not including the state’s $500 billion unfunded pension liability. Spending needs to be cut dramatically, but it won’t be; the state is too politically dysfunctional to do that. And the election of big-spender Jerry Brown will only make things worse. (Incidentally, Governor-elect Brown recently described his state’s budget problems this way: “It is much worse than I thought. I am shocked.”)
Most conservatives are adamantly opposed to bailing out any state, especially California. They argue that Californians in particular don’t deserve a bail out, that a bailout would set a bad example for other states, and that it would cost too much.
But these arguments assume that a bailout of California would come with no strings attached. That may be what ends up happening, but it doesn’t have to. It’s possible to make the bailout contingent on Sacramento making drastic budget cuts and passing constitutional amendments that radically reform the state’s political system.
Seriously? Is this writer a moron? How could you possibly structure any debt guarantees that would force the state to do what a total fiscal collapse wouldn't motivate them to do.
The City of Cincinnati is currently working to cut $60 million from a 2011 budget deficit. It has to be done by 1/1/11. These clowns are still pissing in the wind as the clock strikes 12 Friday. I would put up my life savings and wager that if the feds guaranteed anything for the city (regardless of the attached contingencies) the city would have even more incentive to kick the can down the street.
These governments need to come to grips with the fact that the credit card is busted and it's time to real it in. Allowing them any sort of wiggle room is the space they'll slime into.