interesting thought from TMQ yesterday
Obama to California: I Am Not Raising Your Allowance: Last winter's bailout-a-rama bill contained a $135 billion gift to the states. Having the federal government go still further into debt so states can maintain an illusion of fiscal discipline sounds like the kind of bookkeeping switcheroo you'd expect Republicans to denounce. Instead, Republican governors Charlie Crist of Florida, Jodi Rell of Connecticut and Arnold Schwarzenegger of California complained that they weren't given even more. And don't accuse them of consistency, since all have at some point ritualistically denounced the big spenders in Washington.
The Golden State faced a runaway deficit in part because many Californians pay little if any property taxes. The state's gimmicky property tax law, created by referendum, drastically under-assesses many homes and commercial properties, while essentially eliminating property taxes on those who bought before 1979. The same Californians who don't want to pay property taxes like those in other states want the people who live in other states to be taxed extra to subsidize California. Here, New York Times columnist Paul Krugman, who until the California budget smashup had never met a bailout he didn't like, notes the Golden State's resistance to putting its fiscal house in order is a dire harbinger for the nation as a whole -- since the nation as a whole simply must stop borrowing from the future, and put its fiscal house in order.
In June, California demanded a double-bonus bailout; President Obama did the right thing by saying no. If the White House had printed extra money to subsidize Sacramento government waste, all other 49 states immediately would have demanded special giveaways too, while California would have been encouraged to waste even more. New York did not fix its government-financing mess until President Gerald Ford refused to come to the city's rescue. The famous New York Daily News headline -- FORD TO NEW YORK: DROP DEAD -- kicked off a sequence of events that ended up being good for New York. Obama's refusal to endorse a double-bonus bailout for California forced the state to look in the mirror, and thus was good for California, though California still has a long way to go. California state employees can retire with 90 percent of their final salary, an absurd excess; the July budget compromise that kept the state out of bankruptcy cut $8.1 billion from education but only $1.3 billion from payments to state employees. It's hard to imagine worse mismanagement -- cutting something vital (education) in order to preserve funds for patronage hacks.
The Golden State faced a runaway deficit in part because many Californians pay little if any property taxes. The state's gimmicky property tax law, created by referendum, drastically under-assesses many homes and commercial properties, while essentially eliminating property taxes on those who bought before 1979. The same Californians who don't want to pay property taxes like those in other states want the people who live in other states to be taxed extra to subsidize California. Here, New York Times columnist Paul Krugman, who until the California budget smashup had never met a bailout he didn't like, notes the Golden State's resistance to putting its fiscal house in order is a dire harbinger for the nation as a whole -- since the nation as a whole simply must stop borrowing from the future, and put its fiscal house in order.
In June, California demanded a double-bonus bailout; President Obama did the right thing by saying no. If the White House had printed extra money to subsidize Sacramento government waste, all other 49 states immediately would have demanded special giveaways too, while California would have been encouraged to waste even more. New York did not fix its government-financing mess until President Gerald Ford refused to come to the city's rescue. The famous New York Daily News headline -- FORD TO NEW YORK: DROP DEAD -- kicked off a sequence of events that ended up being good for New York. Obama's refusal to endorse a double-bonus bailout for California forced the state to look in the mirror, and thus was good for California, though California still has a long way to go. California state employees can retire with 90 percent of their final salary, an absurd excess; the July budget compromise that kept the state out of bankruptcy cut $8.1 billion from education but only $1.3 billion from payments to state employees. It's hard to imagine worse mismanagement -- cutting something vital (education) in order to preserve funds for patronage hacks.
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