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About this time every year, as the Legislature and governor wrestle over how to pass the state budget, somewhere, somebody blames Sacramento's stalemate - and the state of the California's mediocre schools and crumbling roads - on Proposition 13. The wail usually echoes unanswered for a simple reason: Thirty-one years after California voters overwhelmingly passed the law that fixed the rate of property tax increases and required a two-thirds majority of the Legislature to raise taxes and approve state budgets, polls show that Prop. 13 is as popular as ever.But this year, with California and the nation in the throes...

California State Assembly Speaker Karen Bass, a Democrat, did an interview with the LA Times. Thought you may enjoy her response to the following question: How do you think conservative talk radio has affected the Legislature's work? Bass' response: The Republicans were essentially threatened and terrorized against voting for revenue. Now [some] are facing recalls. They operate under a terrorist threat: "You vote for revenue and your career is over." I don't know why we allow that kind of terrorism to exist. I guess it's about free speech, but it's extremely unfair. Now that's a first. I know that politicians...

*SNIP* California has 55 electoral votes. A Democrat can't win the White House without winning California. "Obama to California: Drop Dead," is not the kind of Sacramento Bee headline that the president or his party can afford.

Credit markets see a rising risk of default in the Golden State. What are the odds that California defaults on its debt payments? Using the market for credit insurance as a guide, one in four within five years. Those are amazing odds, signalling that those who buy insurance on debt think that the federal government will allow California to fail where it thought that AIG and Citigroup simply had to be rescued. In the past month, rating agencies have warned that California’s $24 billion budget shortfall for the fiscal year beginning in July threatens its credit ratings -- its mark...

Sure, California's economy has seen better days, our budget is a mess, and we've been wondering whether the federal government might help us out with our cash flow. But the barbs sent our way by politicians and commentators in Washington are getting to be a bit much. Democrats suggest that we're all selfish folks who refuse to tax ourselves enough to support our spending. (They should talk.) Republicans say the entire state is addicted to over-spending. (They should talk, too -- see the rising deficits of the Bush era.) Such commentary has been offered with heaping plates of schadenfreude, as...

The Obama administration has turned back pleas for emergency aid from one of the biggest remaining threats to the economy -- the state of California.

Tough Love for California.House Chamber, Washington, D.C.June 11, 2009 M. Speaker: Gov. Schwarzenegger of my home state of California has called for the federal government to underwrite as much as $15 billion of Revenue Anticipation Notes that the state has to issue to avoid insolvency. I think that would be a colossal mistake, and that such an act would not only dig the nation deeper into the hole it is in, but would actually make California’s fiscal condition worse. Today, California faces a paradox: despite record levels of spending and borrowing, it can no longer produce a decent road system,...

California hoped that their dire economic predicament might get enough sympathy from the Obama administration to get a GM-style bailout. Sympathy, the White House has in abundance, but not cash — at least not for self-indulgent states who don’t want to exercise some fiscal discipline. The White House finally drew the line on throwing cash at the insolvent:

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...

California to U.S.: Back us up for new loans State says it needs Washington’s help to stem financial disaster SACRAMENTO, Calif. - If AIG was too big to fail, how about the world's eighth-largest economy? In a move with only one modern-day precedent, California Gov. Arnold Schwarzenegger and Democratic lawmakers are pressing the Obama administration and members of Congress for federal loan guarantees to help the state out of a desperate, multibillion-dollar jam. California is not asking for cash, like the tens of billions given to AIG, General Motors or Morgan Stanley. Instead, the state with the worst credit rating...

Sacramento, Calif. (AP) -- If AIG was too big to fail, how about the world's eighth-largest economy? In a move with only one modern-day precedent, California Gov. Arnold Schwarzenegger and Democratic lawmakers are pressing the Obama administration and members of Congress for federal loan guarantees to help the state out of a desperate, multibillion-dollar jam. California is not asking for cash, like the tens of billions given to AIG, General Motors or Morgan Stanley. Instead, the state with the worst credit rating in the nation is asking that Washington act as a sort of co-signer on the state's borrowing, to...

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...

State and local governments are asking Washington to give them something that banks are trying to get rid of: federal bailout money. California is asking that money from the Treasury’s TARP, the Troubled Asset Relief Program, be used to help back more than $13 billion in short-term borrowings. Members of Congress and several municipalities want bailout money to be used to cover more than $1 billion in losses from investments by municipalities in debt issued by Lehman Brothers, the investment bank that went bust. And Representative Barney Frank, chairman of the House Financial Services Committee, is drafting legislation that would...

CALIFORNIA FINDS itself in more than a bit of a bind: Facing at least a $21 billion budget deficit, the state could run out of money in a matter of weeks. Borrowing to help fill the hole will be challenging and expensive, given that California has the lowest credit rating of all 50 states. Last week's warning by Standard and Poor's to Britain about a possible debt downgrade will make risky government borrowing even more difficult. The state would like to see Uncle Sam pick up part of the tab; but as steeped in the bailout business as the feds...

... Like other states, California is suffering from a collapse in tax revenues brought on by the recession. Unlike other states, it suffers from severely dysfunctional politics, including gridlock-inducing budget procedures and a deeply anti-tax strain that plays itself out in endless voter referenda, dating back to the Proposition 13 property tax cap from the 1970s. As a result, Gov. Arnold Schwarzenegger declared recently that more tax increases are politically impossible. Yet, his proposed spending cuts are also unappealing, if not impossible, including slashing education and health care funds and releasing prison inmates early. What the Obama administration should make...

WASHINGTON – Congress left town on Friday for its annual weeklong Memorial Day break, in no rush to respond to California's simmering financial crisis.Indeed, while the state has more clout than any other on Capitol Hill, there are no signs that it will translate into financial help anytime soon.As Republican Gov. Arnold Schwarzenegger and legislative leaders prepare to make drastic cuts to erase what is now estimated to be a $24.3 billion budget deficit, the response from Democrats who control Congress has been tepid. Consider the statements coming out of congressional offices:• House Speaker Nancy Pelosi of San Francisco: "The...

Reporting from Washington -- California needs to solve its financial crisis by itself and should not expect an emergency bailout from the White House, an array of Obama administration officials said Thursday, making clear they had no appetite to step in and provide financial assistance or loan guarantees.

Twenty-four percent (24%) of voters nationwide favor federal bailout funds for states like California that are encountering “serious financial problems.” The latest Rasmussen Reports national telephone survey found that 59% are opposed to such bailouts. As for California specifically, again just 24% believe the federal government should guarantee the state’s loans. Sixty-six percent (66%) of voters nationwide oppose federal guarantees. California Governor Arnold Schwarzenegger has said the state may request such guarantees. Even given the most extreme example of bankruptcy, voters oppose federal subsidies to keep the state government going. Forty-eight percent (48%) say it would be better for the...

California needs to solve its financial crisis by itself and should not expect an emergency bailout from the White House, an array of Obama administration officials said Thursday, making clear they had no appetite to step in and provide financial assistance or loan guarantees. "Look, we're going to examine what we can do. What we need to do, however, is to treat states fairly and that means uniformly," David Axelrod, senior advisor to the president, said in an interview. "Whatever we do for one state, there will be other states who also will want to do that. And there's a...

Obama administration officials expressed concerns today about California's request for federal intervention in its budget crisis, and even the state's own Congressional delegation is split on the issue. The state has asked the administration to provide loan guarantees for billions of dollars in emergency loans, saying it will soon run out of cash without help from Washington. California braces for brutal budget cutsSchwarzenegger plan won't work, analyst says U.S. backs off threat to withhold California stimulus money California wants U.S. Treasury to backstop loans But today, Treasury Secretary Timothy F. Geithner expressed doubt that he had the authority, without new...