Barring drastic action, the Golden State will run out of cash in March.
There is no provision in the Constitution for dealing with a bankrupt state. But then, there’s nothing explicit dealing with federal bankruptcy, either. The founding fathers didn’t expect their republic to permanently accumulate debt. Indeed, Thomas Jefferson wished to foreswear all sovereign debt. He considered the practice parasitic.
Our leaders are supposed to run our governments so to avoid debt crises.
But, because politicians do just the opposite, they run into cash flow crunches. Last year, California’s statesmen borrowed $5.4 billion to cover the lean time before Spring’s tax revenues flowed in. They had figured they would be good through June, but miscalculated. Now they’re scrambling for an extra $3.3 billion.
Time to fudge the books! Pay late. Not answer the phone or respond to dunning notices.
Of course, the real problem is over-spending. California’s politicians spend too much.
Alas, it doesn’t look like they are about to reform.
Gov. Jerry Brown still pushes the huge “investment” of high-speed rail, for the grandest example. The project’s supporters have over-estimated ridership, underestimated costs (the most realistic official accounting now puts the system at $98 billion), and have been forced to restrict the extent of the line, excluding both San Diego and the state capital. Brown’s response? Making up for cost overruns by hijacking funds from the state’s “cap-and-trade” (the nation’s only carbon-footprint-based) tax.
Ah, politicians: Spend, spend, spend, even as the institutions they are responsible for lurch into insolvency.
This is Common Sense. I’m Paul Jacob.
3 replies on “Down and Out and California”
The taxpayers have been hoodwinked long enough.
Somehow (the Courts not withstanding) they must find a way to refuse to pay more into these grossly excessive Plans. The Plans should proportionately pay what CURRENT assets can buy and no more.
Greed HAS consequences.
California has been printing its own fiat currency, as expressly forbidden by the Constitution, for some time now. As opposed to minting coins in precious metals, that IS allowed by the Constitution. The currency printed by the government of California is the official Californian I.O.U. It is being generated in lieu of actual payment and is officially mandated as being equivalent, dollar for dollar, to a national government issued fiat currency, the dollar. And they are being spent and traded as though they are real currency in California, used to pay debts and make purchases.
And who would challenge the staus quo? Not the Californicators, who might then have to deal with a real bankrupted government and the associated losses and sudden devlauation of this new currency. And certianly not the other states, many of whose own time is approaching where they would have to do the same, like Illinois and New York. Nor the other states, lest the give life to their fears that the national government will start the massive redistribution of the funds that it has been collecting from the citizens of the less spendthirfty states. Wouldn’t do to waken citizens to the impending dumping of their dollars into the massive black hole of debt of California. Citizens mignt get a little testy over the idea that the lib/progs are fixing to make such a large amount of American equity go away. Better that it be done secretly or with backroom deals and in such a way that it seems to be distant and obscure in DC and not connected with the day to day dealings of living in the state.
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”Shall we acquire the means of effectual resistance by lying supinely on our backs and hugging the delusive phantom of hope, until our enemies shall have bound us hand and foot? Sir, we are not weak if we make a proper use of those means which the God of nature hath placed in our power. The millions of people, armed in the holy cause of liberty, and in such a country as that which we possess, are invincible by any force which our enemy can send against us. Besides, sir, we shall not fight our battles alone. There is a just God who presides over the destinies of nations, and who will raise up friends to fight our battles for us. The battle, sir, is not to the strong alone; it is to the vigilant, the active, the brave. Besides, sir, we have no election. If we were base enough to desire it, it is now too late to retire from the contest. There is no retreat but in submission and slavery! Our chains are forged!”_ Patrick Henry, March 23, 1775