This article from The Economist explains the dire situation in California, a 25 Billion dollar deficit that must be solved quickly or the state will have to default on many loans it has taken out. If this were to happen, the US Government would have to bail them out to avoid an enormous depression. Yet we cannot afford to bail out a state like California completely.
Even with all this on the line, republicans in California are moving to block measures proposed by Governor Brown, a democrat. The bill he has proposed even includes massive cuts--something the republican party has been calling for--that only spare the schools and a select few public services. The other half of the bill calls for increases in sales, income, and car taxes. This is the part Republicans obstinately object to, and have now banded together to block any and all budgetary legislation Gov. Jerry Brown proposes.
This could have devastating economic effects if a stalemate continues for too long. With the US federal government facing the prospect of hitting the national debt ceiling, bailing out California, whose debt is larger than many states entire budgets, would be a disaster. The question remains: will politicians realize the need for action in time, or will the tradition of reactionary politics doom the Californian and US economy?
1 comment:
California is in dire need of some sort of budget to resolve it's massive debt crisis. So far, subsidizing the sale of pot hasn't caught on as a viable solution!
Jerry Brown has been carving away with a scalpel at the current budget, looking for wasteful spending and the like. It is clear that this won't cover the huge deficits seen in the state. The new tax proposal that Gov. Brown was hoping to get on the ballot appears to have been almost defeated already with the retreat of the 5 Republicans he was counting on.
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