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they could create a financial flashpoint in the state that could ripple into the markets in general. also, imagine the daily media coverage of the "sick and the poor" not getting their benefits, schools closed, tens of thousands of government employees protesting. there could even be riots and civil disobedience. in short, it could get VERY ugly if the government there simply throws up their hands and lets everything implode. that type of scenario could be very bad for Bush.

to be honest, the state republicans there should just pass any and all tax increases the Dems want to avoid this scenario. as you say, Bush will never win California anyway and there is near zero chance of defeating either of their senators, so why allow that state to become a national issue? its not worth it, the business and people who can and want to leave CA have plenty of places to go.

the business and people who can and want to leave CA have plenty of places to go.

I don't think the Democrats in power are in positive control. They only react when they are forced to at the last minute. One thing I worry about is that they see value in crashing the California real estate market. If a good percentage of the population goes underwater on their real estate loans the taxpayers will be unable to leave as state taxes go further through the roof. I can see the failed socialists building a new Berlin wall, one with an invisible leash.