Posted on 06/15/2009 11:25:40 PM PDT by Lorianne
The Obama administration has turned back pleas for emergency aid from one of the biggest remaining threats to the economy -- the state of California.
Top state officials have gone hat in hand to the administration, armed with dire warnings of a fast-approaching "fiscal meltdown" caused by a budget shortfall. Concern has grown inside the White House in recent weeks as California's fiscal condition has worsened, leading to high-level administration meetings. But federal officials are worried that a bailout of California would set off a cascade of demands from other states.
With an economy larger than Canada's or Brazil's, the state is too big to fail, California officials urge.
"This matters for the U.S., not just for California," said U.S. Rep. Zoe Lofgren, who chairs the state's Democratic congressional delegation. "I can't speak for the president, but when you've got the 8th biggest economy in the world sitting as one of your 50 states, it's hard to see how the country recovers if that state does not."
The administration is worried that California will enact massive cuts to close its deficit, estimated at $24 billion for the fiscal year that begins July 1, aggravating the state's recession and further dragging down the national economy.
After a series of meetings, Treasury Secretary Timothy F. Geithner, top White House economists Lawrence Summers and Christina Romer, and other senior officials have decided that California could hold on a little longer and should get its budget in order rather than rely on a federal bailout.
(Excerpt) Read more at washingtonpost.com ...
I think the thinking is that the cuts and reductions will at some point and to some degree reduce the amount of money flowing around.
If the state reduces its purchase of toilet paper by 50%, say, then the manufacturers and suppliers of toilet paper are going to be hurt and will in turn reduce the size of their workforce.
Then the newly unemployed workers of the toilet paper sector of the economy start trimming their personal budgets, cutting back from premium to basic cable and stretching the time between haircuts from 6 weeks to 9 weeks.
Then the cable companies and the owners of SuperCuts franchises start reducing the number of their employees, and on and on and on....
Good points, Zoe. Quit thumbing your nose at the taxpayers and start cutting the graft.
They will let this run right up to “dire crisis” and then start shoveling money out there so they (Obama Administration) can be the saviors. They got votes to worry about. state politicians are screwed if things get too bad. the feds are in this for themselves.
spending is stimulus. say you close a day care center. free day care,ok? employees fired-they don’t spend. a few fammilies might not be able to afford pay care so one might quit a job.
i’m not saying this is a bad thing mind you. they need to melt down and get their house in order.but yea,cuts will be a drag n the economy.(some programs you can be sure spend more than they generate. most probably,but still will slow the economy at first.)
Goodbye, CA - We hardly knew ya...
/tin foil...?
>> one of the biggest remaining threats to the economy
No bias or “editorializing” there. No sir! These journalists are PROFESSIONALS.
not.
-- Prime Minister Margaret Thatcher
The difference is...California is trying to save public sector jobs, AIG was a private sector company. The multiplier on public sector spending is less than one...for every public sector job created or saved, you'll destroy a larger number of private sector jobs. Without a private sector economy, there'd be no one to pay the public sector bills.
But come on, supposedly the Treasury's being paid back 80 billion they loaned to banks, how about a quarter of that for California?
I think it should go back to the states that ponied up the TARP money in the first place. You're free to take back your 1-2 billion. Otherwise, why should my state suffer because your state can't figure out how to balance their budget? If I paid California today, would they turn around and repay me when their bailout bankrupted me? I somehow doubt it.
And don't ask us to co-sign on your next bond issue, either. If you don't like the junk bond rates you're quoted, don't come crying. Co-signing is the same as a bailout.
So, you're saying the level of crap is proportional to the size of government? Or that public servants can only crap on the public dime?
hehe...couldn't resist.
Unfortunately, since California is 24 billion in the hole, they've got to basically cut 24 billion worth of public sector jobs/spending. In a balanced-budget world (obviously not Lala Land), cutting one government sector job would free up enough private sector money/capital to create more than one private sector job.
Don't cry for them. This 24 billion is a drain on their private sector. Without the state's largesse, their economy could have been generating much more than that 24 billion.
Too big to fail? I’d love to test that theory.
Borrowing is not!!!
say you close a day care center. free day care,ok?
There's no such thing as free day care. To make it free, the government has to take money out of my pocket to pay for it.
employees fired-they don’t spend
Employees taxed too much, they don't spend, either. Every day, I think of the vacations I'd like to take if it weren't for the thousands upon thousands of dollars of federal tax and state tax and property tax and sales tax I pay in order to subsidize government-run giveaways to other people.
How many more people could Disneyland employ if my tax rate was lower?!?!
i’m sorry. looking for where i said borrowing by the gov’t is stimulative? (it is business however.)
Free day care since i didn’t take enough care in explaining myself,is free for the person using the service,especially if they’re in a tax bracket that they don’t pay taxes.
Employees fired -don’t spend. Lets see. Again i am looking for what i said about taxes and gee,looks like the only reference was oblique,they have to cut spending. I’m sorry i didn’t spell this out to your satisfaction.
I’m not quite sure why you responded to my post the way you did since i was trying to help the poster i was replying to. You’ll of course forgive me for wondering why you cherry picked my example and disregarded my saying Calif. had to melt down to get their house in order. Or perhaps why you ignored my stating that govt programs spend more than they generate which is as we all know,a sure way to dig yourself quite a nice hole.
I hope this longer post satisfies you. I also hope you don’t need to reply in such an agressive fashion to my simple thoughts.
I see your point, but that’s a Democrat - Socialist argument, as far as I can tell.
It’s not at all proven that “spending is stimulus”, unless you’re talking about spending on the order of mobilizing industrial war material manufacturing.
The make-work projects that will result in paychecks to the few, will certainly result in that money filtering into the economy, but that money was first taken out of the economy through taxation.
That’s simple re-distribution, which does nothing to spur actual economic growth.
Sorry. No sale.
== They know exactly what they`re saying, they`re pushing the buttons that work on the masses.
“You need this new oppressive law to protect you from those bad people” or “you need this new bailout because you’ll suffer misery if it’s not passed” or even “we must have a World financial institution to manage the Global economy” are all cogs in the same NWO machine. ==
Point taken.
It’s just that so much of their propaganda is nonsensical on its face, and an insult to our intelligence.
It's a bogus argument, because all of that money would have naturally flowed into the free market economy, if it hadn't been hijacked by the government.
Much of it would have funded investment in expanding and growing the real economy, which would have in turn, created more jobs and wealth for the people.
There is no upside to government stealing the profits of our labors. None.
BEWARE!!!!!
“...do not rule out helping the state if its condition significantly deteriorates, a senior administration official said. But in that case, federal help would carry conditions to protect taxpayers and make similar requests for aid unattractive to other states, the official said. “”
Translation:
We will wait for California to fail, then the Feds will waltz in and start the remaking of America, one state at a time. This will be the wedge they use to destroy US.
BEWARE!!!!!!
BTTT
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