Despite the fact that California is essentially the engine of economic growth for the nation, the CA budget situation has gotten relatively little coverage at the national level. Nonetheless, some of California's state and federal leaders have been quietly cajoling the Obama administration to help us out. The Washington Post thinks it won't come soon, if at all:
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.
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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. These policymakers continue to watch the situation closely and 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. The official did not detail those conditions.
(Washington Post 6/16/09)
After a whole schpiel about how Prop 13 and ballot box budgeting has created an inflexible budget too reliant on bubbles (can't argue with that), the Post then hints that the Geithner and the gang at Treasury might someday support a plan for California. However, it appears likely that there will be strings connected to any money. It's not clear how the strings would operate, as the voters would still need to approve constitutional reforms to actually implement any of said strings. And you know, our voters can be a bit finicky.
The argument that we are offsetting about 5% of the federal stimulus doesn't seem to be determinative, yet. For the time being, it appears that the Obama administration is content to let California cut its way out of this. |
