California or Bust!

Let’s face it, now you can get both. As the rest of the country looks on with a smirk – those crazy left-coasters, God is punishing them – California’s temporary budget, passed in February, is now kaput, because it was dependent on a set of budget-driven propositions passing. They went down in glorious flames on May 19^th. And anyway, we have wildfire and earthquakes; God has already punished us.

Staring down the double barrel of a $21.3 billion shortfall-shotgun, profoundly worse because the economy has eroded the state’s tax base, Governor Arnold Schwarzenegger is groveling at the feet of the feds for billions of bailout money. Looks like poor kids don’t get medical coverage, abused women are on their own, ordinary kids get an even worse-than-terrible education (we’ll all pay for that later!), lots of felons get a get-out-of-jail free card to reduce prison costs, courts will close, programs terminated… I can hear the laughter from the rest of the country now.

California is huge (38 million residents), massive and ungovernable. Ballot initiatives have created a “citizen-controlled” government where what would be traditionally legislative functions have been taken over by the electorate, usually reacting in a rage to an appropriate rabble-rouser (think Howard Jarvis and the famous “Proposition 13” that capped property taxes)… and… oh... yeah, that 2/3 vote required for passing a budget. You might say that Californians are punishing themselves.

So after decades of Republican-Democratic conspiracies to gerrymander incumbents to remain in office, the state is frayed by the fringe of both parties (with disproportionate power which they use at budget time to push their favorite programs through). Fortunately, the Governator managed to push through a voter-supported independent panel to set the boundaries now, so that problem is going away in the near future. But the budget of a state with a disproportionate share of undocumented aliens (and the state social cost that go with that reality) really didn’t need to run out of money.

And trust me, if California goes south, no matter how hard the rest of the country is laughing, you really can’t bailout the automakers, the big banks and insurance companies and let about 13% of the total U.S. population slide out of the U.S. economy. Chapter 9 (bankruptcies for entities that are less than the whole state, e.g., municipalities) will shift an even bigger burden to the federal government if large sub-sections of California go under. And think of all those uneducated children we can send to work in other states!

There is a solution down the road, and the Governator is definitely pressing for this solution (which, believe or not, requires another ballot initiative): a California constitutional convention. I liked looking at how the New York Times looked at this mess (May 20^th): “The last time California held a constitutional convention was in 1878-79 when the state’s founding constitution was rewritten, though a state commission made revisions to the document in the 1960s and 1970s… ‘The majority of Californians say the state is headed in the wrong direction,’ said Mark Baldassare, the president of the Public Policy Institute of California, a nonpartisan polling organization. In a March poll of 2,004 residents, two-thirds said the Constitution should be altered, Mr. Baldassare said… ‘I think that we could be at a crossroads here,’ Mr. Baldassare said. ‘People in California don’t feel they have the government we need in the 21st century.’”

Taxpayers are reluctant to expand the bailout, and the Obama administration is reacting with extreme caution. The May 22^nd Los Angeles Times: “California needs to solve its financial crisis by itself and should not expect an emergency bailout from the White House, an array of Obama administration officials said [May 21^st], making clear they had no appetite to step in and provide financial assistance or loan guarantees… ‘Look, we're going to examine what we can do. What we need to do, however, is to treat states fairly and that means uniformly,’ David Axelrod, senior advisor to the president, said in an interview. ‘Whatever we do for one state, there will be other states who also will want to do that. And there’s a limit to what the government can do.’”

Borrowing money isn’t much of a palliative either. The May 22^nd LA Times: [State Treasurer Bill Lockyer] and … Controller John Chiang told the 10-person joint [California] legislative committee that the state likely will have to limit its borrowing to $10 billion or less because of the wariness of post-meltdown credit markets and the state’s precarious fiscal straits.] In short, we’re screwed, and with the threat of a further economic decline as the year unwinds, we could even get super-screwed!

If the state serially begins to file Chapter 9 bankruptcies for various governmental divisions, the feds will be brought in anyway to deal with the mess in a profoundly more expensive and disastrous way than dealing with the crisis pending calling a state constitutional convention. Can you see federal troops replacing fire fighters and police? Well New York, and everybody else, remember, California’s financial problems, Michigan’s auto-making industrial collapse, New York’s Wall Street fall, Texas, Florida and Louisiana’s hurricane damage, Iowa’s flooding… well you get it… We are all in this mess together. On three, pull … one, two, three!

I’m Peter Dekom, and I live here!