California Moves Closer Toward Default

BigGovernment.com ^ | 3/15/2011 | Chriss W. Street

[GVnana]

California tax payers just took a huge punch in the nose from the same actuaries who provided the cover for state politicians to spike public employee retirement benefits. The latest shocker comes from California State Controller John Chiang who yesterday unveiled a new actuarial report that shows California faces another unfunded debt of $59.9 billion to pay for retiree health and dental benefits over the next 30 years.

Controller Chiang highlighted that the unfunded liability grew during the 2010 fiscal year by $8.1 billion; an amount equal to almost 25% of this year’s entire California kindergarten through high school education budget.

Actuaries have aided and abetted the explosion in under-funding of pension and healthcare liabilities for public employee pension plans over the last ten years. With most public employee pension plans fully funded in 2000, a preposterous actuary study gave assurances that the technology stock market bubble of the 1990s would continue its high returns never burst.

[GVnana]

Before this latest bomb-shell hit, California already had a $28 billion budget deficit through the middle of 2012 and the state needed to borrow $15 billion by August, just to continue to make payroll.

[Beaten Valve]

And our stupid leader, Gov. Moonbeam, thinks that voters are going to go along with voting for a “temporary” tax increase this year?

Dream on...

[padre35]

Democrats=Bad at Math

Strikes again.

[ChocChipCookie]

I wish someone, ANYONE, in the media or government would begin spelling out loud and clear what the repercussions will be if a municipality or state defaults. We’ve been hearing, ‘the sky is falling’ for decades, and I believe people are now deaf to articles like these. NO ONE explains how a default or a bankrupted city/county/state will affect them.

[GVnana]

NO ONE explains how a default or a bankrupted city/county/state will affect them.

Oh, they'll just trot out some Pelosi-like troll and say, "There, see. It's not so bad. Blame Bush."

[truthguy]

And our stupid leader, Gov. Moonbeam, thinks that voters are going to go along with voting for a “temporary” tax increase this year?

Part of what you say is true. But Moonbeam may not be as dumb as you think. If the proposition is on the ballot, Brown and the Democrats are counting on the number of people who don't pay any taxes or very little taxes to approve a huge tax increase on those of us who do pay taxes and pay a lot of taxes. So there is method in the madness.

Californians are nothing if not brain damaged. They simply do not believe that we can go bankruptcy or into default. They will know it when financial institutions will not accept their government checks. Then it will hit the fan.

The problem in California is Californians, or at least 55-60% of them.

[swarthyguy]

“My fellow Americans,

Today I come before you to talk about the state of California, which if it was a country would be the 10 largest economy in the world, and why it should not be allowed to default.

President Bush rescued Wall Street, my administration will rescue California.

I am urging individuals to invest in America by buying our Special Edition of US Treasury Bonds specifically for Califonia........

—Hehehehe- Why do I have the feeling that the Obamawallahs would love this eventuality.

“California must not drown under a tsunami of debt!”

[mikrofon]

OK, NOT an article about the state falling into the San Andreas....

[businessprofessor]

“I wish someone, ANYONE, in the media or government would begin spelling out loud and clear what the repercussions will be if a municipality or state defaults. We’ve been hearing, ‘the sky is falling’ for decades, and I believe people are now deaf to articles like these. NO ONE explains how a default or a bankrupted city/county/state will affect them.”

The impact is not clear so I am not sure that anyone can predict it. Every previous default has either been small or subsidized to limit the impact. I think that recent situations in Illinois and California are a hint about the impact. Both states stiffed creditors during economic problems in the last 2 years. California would not send tax refunds in addition to stiffing creditors who had provided services. Illinois stiffed creditors forcing many small businesses not to accept Illinois debit cards. The federal government also engages in this same behavior, perhaps out of incompetence. Medicare has not paid some providers from a summer medical incident with my MIL. It is impossible to deal with Medicare. No one is home.

I predict non acceptance of state payment cards. Anyone using these cards will be unable to obtain services. I am uncertain about bond defaults. The wiff of a default will stop new bond funding. I predict that Democrats will turn on their public employee allies. The public employees have powerful legal arguments but I am not sure if the arguments will prevail when default looms.

[ScottinVA]

How many times have we heard CA is moving closer toward default. By now, one would think they’re banging at the door.

[Darteaus94025]

And our stupid leader, Gov. Moonbeam, thinks that voters are going to go along with voting for a “temporary” tax increase this year?

Uh, I wouldn't bet against it. CA is no longer the state it used to be.

The unions will vote to keep the spending going, as they directly benefit.
The underclass - and it is bigger than it has ever been - will vote to keep the spending going, as they collect benefits.
12.4% unemployed will vote to keep the spending going, as they also collect the benefits.
The liberals will vote to keep the spending going, as they only see benefits, and they never look at costs VS benefits.

Additional factors:
1) The press will be in favor of spending.
2) Turnout will be low given this is an off-cycle election. Low turnout will favor the unions.

Finally, let's not forget that the CA voters just doubled-down on stupid this past November.

I hope you are right, but I just don't think stopping the tax increase will be a no-brainer.

[Thane_Banquo]

And today’s award for corniest FReeper joke goes to...

[Thane_Banquo]

And today’s award for corniest FReeper joke goes to...

[rogue yam]

If the proposition is on the ballot, Brown and the Democrats are counting on the number of people who don't pay any taxes or very little taxes to approve a huge tax increase on those of us who do pay taxes and pay a lot of taxes.

I'm not sure they will even manage to get it on the ballot. And if they do, their target is June, an off-year springtime special election. Turnout will be way down. The public employees will vote but the welfare bums, the identity politics tribes, and the special interest whackos might stay home. If conservatives, and property owners, and small-town and rural people, and retirees, and anti-tax folks can get fired up we'll shoot this thing down.

Gov. Moonbeam will be left muttering into his soy-chai latte.

[DUMBGRUNT]

Michael Moore said they have plenty of money!

[rogue yam]

Finally, let's not forget that the CA voters just doubled-down on stupid this past November.

In November Californians voted for dreams and moonbeams.

It was stupid, yes, but that is not the same thing as voting for a whopping big tax increase.

[Bernard Marx]

CA is no longer the state it used to be.

I agree with your assessment. CA should stand as a warning to the rest of the country. It's a vivid example of the truth of this warning:

"A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy."

[RightOnTheLeftCoast]

Oh, they'll just trot out some Pelosi-like troll and say, "There, see. It's not so bad. Blame Bush."

Actually, I do blame that uber-RINO girlie-man, Schwarzenspender, for his refusal to lead. Sure, the state legislature shoulders much of the blame, as do idiot voters for their willingness to approve all bond issues marketed as being "for the children." But the Governor has the bully pulpit, and it was more important to Arnold to be liked than to be tough.

I actually have more hope for Brown than I did for Arnold in his last couple years. Brown balanced Oakland's budget, which is a far sight more than Arnold ever accomplished in Sacramento.

[fr_freak]

The problem in California is Californians, or at least 55-60% of them.

Actually, the number is more like 51-52% (check the election stats), but that majority is full of spoiled children who are so used to Daddy being able to pay for everything that they can't comprehend why Daddy can't just go to the ATM anymore and pull out money to pay for their pretty things. Daddy must be racist!

[calcowgirl]

What a bunch of hyperbolic nonsense. This guy throws everything into the equation, including the kitchen sink, whether it is relevant, or not. A stunning display of ignorance for a “journalist” reporting on pension matters.