Most people assume that when California finally goes bankrupt...that Washington will come to save them. I have doubts over this. Most states are going to ask about the amount involved, and then TELL California to make massive cuts or they won’t accept something like this. By massive cuts...I’m talking about thirty to forty percent. I don’t think the legislature or Governor will accept those terms...and the majority of states will go against them.
All in all...you have to believe that an exodus of people will occur at that point...and tax revenue will decrease.
The liberals will demand California be bailed out, after all if the American people bailed out the banks they should bail out the starving children and elderly of California who are in this situation through not fault of their own.
What I really fear is the Federal Reserve bailing out the state through loans (i.e. printing money) if Congress does actually stand up and say no. The consequences for the nation as a whole would be just as bad.
It is sad but our politicians just can’t say no at the state or federal level. They reflect the wishes of the 45% of the people who collect government checks. In my town the citizens (I won’t say taxpayers) just voted for a $40 million bond issue to build a new downtown library. No one even evaluated the cost of renovating the current library. Given the trend to digitalization they certainly didn’t need more space. In fact, the downtown library is essentially a daytime homeless shelter where your average citizen fears to tread. Given our city has a big budget crisis after spending millions on a new minor league ballpark downtown, this bond issue should never have been put forward. However when you have voters who don’t pay taxes, who cares about the money. While I’d much prefer to spend money on libraries (in the suburbs where people might actually get some use out of them) than ball parks, we can’t afford either. This is California coming to the rest of the nation.