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NewsTalk

Welcome to the archives for NewsTalk, an IBJ blog published from November 2007 through December 2010.

Elected Officials / Economic Stimulus / State Government / Federal Government / Government & Economic Development / Government

Bailing out big spenders

December 17, 2009

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?

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