Bailing out big spenders

December 17, 2009
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Californians have long boasted of enjoying one of the world’s most prosperous economies. But the state is now so close to insolvency that Gov. Arnold Schwarzenegger and the speaker of the U.S. House, Nancy Pelosi, whose district is in San Francisco, are agitating for the federal government to borrow more money so a new round of stimulus spending can be handed their way.

And who might help pay for this bailout, you might ask with a healthy dose of skepticism? You guessed it. Hoosiers and other fiscally responsible Americans.

President Obama, who preached about personal responsibility during his campaign and has held the line on state bailouts, opened the door a week ago to including states in a proposed second round of stimulus spending.

California has raised car registration fees, and cut costs across everything from universities to police protection. Even its Supreme Court is closing one day a month to save money.

But just how deep are those cuts? It’s true that the state has laid off employees, but there are still more on the payroll than in 2007.

Indiana by contrast trimmed its state work force in 2006 and has largely held to that level. (It should be noted that some of the work was handed to private contractors whose employees don’t show up on state rosters.)

Californians argue their vaunted entertainment and tech economies are in the tank. But so is auto manufacturing in Indiana and the rest of the Rust Belt. Yet, Hoosiers aren’t crying for a bailout. And Indiana has managed to preserve a substantial rainy day fund.

Consider also that some of the states with the biggest problems—California, Illinois and New York—are Democratic bastions that might come in handy for the party during the 2010 elections.

What do you think? If this comes to a vote, how to you anticipate Indiana’s congressional delegation responding? What should they do?

    Fellow hoosier here, living in L.A. There needs to be more custs in the CA gov. spending and payrolls, first.
  • Jane is Right an extent. we do need to have cuts, but also have the local/state governments make a plan of attack. An agressive way to bring money in and stop making cuts left and right. Granted, we need to watch overhead, but I have been watching the local news and they are making a big deal about how we are spending in the thousands on keeping the ground cleared during the winter. My question is, When do we stop the cuts and start promoting spending. What we need is people to start investing in our local economy again. Not just the insiders investing, but the outsiders as well. We need companies and people creating jobs and creating project stimulus and not a Government Stimulus, unless that stimulus is creating jobs which creates spending and the end result is part of the spending is taxed and comes back to the government to pay off the stimulus in the first place.

    somehow getting money flowing so taxes can be collected and we can start to pay off the local, state, and federal deficate.
  • Muckraking
    California's problems stem from its polarized legislature that was created by right wing activitsts who pushed through constitutional changes and subsequent ballot initiatives that meet all the lowest common denominators of the populist agenda: no taxes and higher entitlements. California MAY have learned its lessons. It is seeking new constituional changes to make a 2 party system work again.

    Yes, set tough conditions on any states that require additional federal borrowing (not = bail-outs). Don't demonize Obama or Democrats in general. They are not the root cause of this problem.

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