California Is Another Toxic Asset

Toxic Assets. Over the past year, our government has spent trillions to relieve the economy of their burden. We’ve been told time and time again that by giving $20,000,000,000 in TARP funds to Bank of America, for example, the feds were going to “fix” the mortgage crisis, and the “toxic loans” that it entails. But bailouts, like the $150,000,000,000 given to AIG, have done nothing to revive economic growth.

Bailing out banks and lending institutions have not made life easier for anyone. AIG still lost $4,400,000,000 last quarter. Bear Sterns still had to merge with JP Morgan Chase out of financial necessity. The “toxic assets” are still in the same poor condition they were in before. The Dow Jones Industrial Average closed 4348.3 points lower on May 22, 2009 than it did on May 22, 2008, and Chrysler has filed for Chapter 11 bankruptcy and closed a plurality of dealerships.

However, banks and private companies have begun to seem kind of boring for the government. Now they have aimed their crosshairs at independent states.

With more than $5,000,000,000 in borrowed funds, $21,300,000,000 in cumulative debt, the second highest personal income tax in the nation, and a perpetual spending spree, California looks like a juicy “toxic asset” for the government to take control of, and, after all, isn’t California just “too big to fail?”

There are a number of reasons why California should not be “bailed out.” First and foremost, with its own more than $21,000,000,000 in debt, California has no room for a bailout. If it can’t pay back what it already owes, why should the Federal Government expect it to pay back any more money? The fact is another mountain of additional debt (and I say mountain because the bailout will probably be bigger than the $150,000,000,000 AIG loan) will only burden California more, and if California is unable to pay the extra debt off, which is inevitable, they will come back to the Feds asking for more money.

Secondly, if the Federal Government bails out California, what will be the consequences? Will the Federal Government gain the ability to kick out and replace state “CEO’s” (governors) and other state officials like they did at GM? A Federal bailout is harmful to the independence of California, just like similar handouts have been harmful to the private sector’s say in the auto industry, the banking industry, and all others who have touched bailouts.

Thirdly, the Federal Government has often talked about how bad loans that people could not repay created this financial mess. If that was a major issue with the private sector during the financial meltdown, than “bailing out” institutions going south could be the downfall of the federal government.

California’s overspending -- as Grover Norquist put it “California does not have a $21.3 billion deficit, it has a $21.3 billion spending problem.” -- it’s overtaxing -- someone with $50,000 in taxable income is taxed out of more than $2,000 (if there are no possible deductions) -- and its excessive borrowing -- I mentioned $5,000,000,000 (and the number is perpetually growing) -- make it a financial hazard to anyone wanting to loan to it.

If there were a “hazmat” team for states with bad finances, they would be swarming all over California. California’s economic woes, while bad today, will continue (after all, every year spending in California increases). Any money given to the State of California will only be wasted, and lost, on California; and don’t forget, the money being given to California is the money of each and every tax-paying American. Not only is the Federal Government going to hurt itself financial, but the American people will take a major blow.

Finally, America’s Federal Government must remember that it is not immune from the same problems. It too, can be hurt by the blows of overspending, high taxes, and borrowing. Spending more money that we do not have as a country is only destructive to our financial well being on the whole. Some ask is it logical; I ask is it feasible. Our Federal Government, reliant on the taxpayer, has already bit off more than it can spend. Our more than $10,000,000,000,000 deficit is only going to be increased by the impossibility of California ever paying back a loan. What’s more the Federal Government needs to let the States, simply by logical principle, fight their own battles when it comes to their budgets. The more the Federal Government steps in, the more it becomes common, and the more it becomes common, the more the States lose their Constitutional rights, abilities, and powers.

It is my firm belief that the facts, and the truth behind California’s perpetual economic problems, its continual fiscal issues, and its extremely destructive tax code are certainly not in the best interest of America and, more importantly, not in the best interest of her citizens.

America is a nation of free States, and for the government to stick its hand into the free and independent pillars of this Union is destructive and harmful to it. The solution to the entire problem is simple: The people of California must vote the government officials who have contributed strongly to this financial mess out of office.

California was best described by its Legislative Analyst’s Office’s only statement at the end of this year’s state budget analysis; “Was Ugly. … Getting Uglier.”

Will Obama find a way to bail out California?????

Since he wants to bail out car companies and banks, is it such a stretch to bail out state governments?

It might not be a direct bailout. Maybe Obama would have the feds give loan guarantees to Calif. or stand behind Calif. gov’t bonds. Anything to paper over this issue through the mid-term elections in Nov. 2010.

Maybe a better start would be to readjust the amount of Federal tax paid by California so that instead of getting $0.70 back for every $1 that goes to the Feds, California paid $0.70 and gets $0.70 back in services. You know, help the economy by getting out of its way instead of trying to bail it out. Just a crazy, wild thought.

“Maybe a better start would be to readjust the amount of Federal tax paid by California so that instead of getting $0.70 back for every $1 that goes to the Feds, California paid $0.70 and gets $0.70 back in services. You know, help the economy by getting out of its way instead of trying to bail it out. Just a crazy, wild thought.”

That is an inevitable byproduct of a progressive federal income tax. CA is rich. It pays more in taxes per person. If the population of CA would start voting for national polticians who would eliminate progressive taxation, I would be all for your proposal. But CA’s voters will continue to elect politicians who impose progressive income taxes and other dysfunctional ideas on the entire nation.

CA voters play a big part in maintaining and making worse, the tax system that causes the problem you highlight. CA needs to crash and burn before it’s voters will ever get any common sense. Until then, I oppose any assistance to CA.

"If the population of CA would start voting for national polticians who would eliminate progressive taxation, I would be all for your proposal. But CA’s voters will continue to elect politicians who impose progressive income taxes and other dysfunctional ideas on the entire nation."

... but plenty of red states -- all of them in the Presidential election, in fact, except Texas -- take more money from the feds than they put in. Their congressional delegations are obviously willing participants in this redistribution of wealth, regardless of how conservative they claim to be. Surely you're against that, right? Shouldn't wealth stay with those who've earned it?

“... but plenty of red states — all of them in the Presidential election, in fact, except Texas — take more money from the feds than they put in. Their congressional delegations are obviously willing participants in this redistribution of wealth, regardless of how conservative they claim to be. Surely you’re against that, right? Shouldn’t wealth stay with those who’ve earned it?”

If CA voters aren’t willing to stop imposing stupid ideas on the rest of the country, like progressive income taxes, they get no sympathy from me. They voted in the leftists. They live with the consequences of dealing with the devil. They impose plenty of costs on the rest of us. They can absorb some of the costs.

Also, they could get state spending under control.

"If CA voters aren’t willing to stop imposing stupid ideas on the rest of the country, like progressive income taxes, they get no sympathy from me. They voted in the leftists. They live with the consequences of dealing with the devil. They impose plenty of costs on the rest of us. They can absorb some of the costs."

Did you vote for a congressional representative who brings home more to your district in pork and federal programs than your district pays in? Or, if you voted for their opponent, would the opponent have done so? These aren't rhetorical questions; I'm genuinely curious. If so, you're supporting big government, and saying you're going to wait until California isn't progressive anymore before supporting federal budget cuts is ridiculous -- we all know that ain't happening any time soon. You're either for small government or you're not.

Could this be part of the problem?

From the L. A. Times
1. 40% of all workers in L. A. County ( L. A. County has 10.2 million people)are working for cash and not paying taxes. This is because they are predominantly illegal immigrants working without a green card.
2. 95% of warrants for murder in Los Angeles are for illegal aliens.
3. 75% of people on the most wanted list in Los Angeles are illegal aliens.
4. Over 2/3 of all births in Los Angeles County are to illegal alien Mexicans on Medi-Cal , whose births were paid for by taxpayers.
5. Nearly 35% of all inmates in California detention centers are Mexican nationals here illegally
6. Over 300,000 illegal aliens in Los Angeles County are living in garages.
7. The FBI reports half of all gang members in Los Angeles are most likely illegal aliens from south of the border.
8. Nearly 60% of all occupants of HUD properties are illegal.
9. 21 radio stations in L. A. are Spanish speaking.
10. In L. A. County 5.1 million people speak English, 3.9 million speak Spanish.
(There are 10.2 million people in L. A. County . )

(All 10 of the above are from the Los Angeles Times)

Less than 2% of illegal aliens are picking our crops, but 29% are on welfare. Over 70% of the United States ‘ annual population growth (and over 90% of California , Florida , and New York ) results from immigration. 29% of inmates in federal prisons are illegal aliens.

"Could this be part of the problem? (10 rather scary stats from the Los Angeles Times) Less than 2% of illegal aliens are picking our crops, but 29% are on welfare."

Absolutely. I think CA needs to solve this problem, and I thinks solution #1 is cracking down on businesses that knowingly hire illegal aliens year after year. If your house has a mouse problem, catching them in traps is a good solution but it's only going to get you so far if people keep leaving piles of cheese all over the floor. Companies that knowingly and repeatedly hire illegal aliens send the message that there's an open and inviting environment here, and that message needs to be stopped. I say we fine companies $5,000 the first time they hire an illegal immigrant, $10,000 the second time, $25,000 each time after that, and then use that money to fund enforcement.

“Did you vote for a congressional representative who brings home more to your district in pork and federal programs than your district pays in? Or, if you voted for their opponent, would the opponent have done so? These aren’t rhetorical questions; I’m genuinely curious.”

Actually, for years, I have had the luxury of voting for a candidate who pretty much avoided the pork rolling in Congress. We’ll see how the new guy does.

CA is a big part of the national political disease. I see no reason to impose its dysfunction on US citizens who live in somewhat less dysfunctional places.

I’m quite serious when I say CA has to crash and burn. That’s the only way its citizens will ever start electing small government conservatives. Until CA gets on the side of progress and stops sending leftists to congress and the whitehouse, a repair of this nation’s problems is basically impossible. A bailout of CA just kicks that can down the road.

Well, I'm glad you asked, because I have to change my figures slightly -- it's $0.78, not $0.70. That's what I get for working from memory.

The Tax Foundation has numbers on each state available here. Interestingly, the only state that voted Republican and paid more to the Feds than it got back was Texas.

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