California has a one-year budget deficit that exceeds the cost of operating the entire State of Georgia. California’s deficit is $24 billion; Georgia’s 2010 budget, which goes into effect on Wednesday, is $18.6 billion. California’s population is 38.6 million; Georgia’s is 9.6.
The question is: Should the federal government ride to the rescue, as it did with the financial sector, including banks, and with the automobile industry?
California officials say they’ll make additional budget cuts, but want federal taxpayers to guarantee a portion their borrowings, which would bring lower interest rates. California, like Atlanta, has been represented by big-spenders whose short-sightedness has brought financial peril. Politicians think in four-year cycles and what must be done by way of spending to give incumbents or the incumbent party election advantage.
Atlanta City Council did vote 8-7 on Monday to raise property taxes by about $240 per year for the average homeowner to cover a $56 million gap in the proposed budget. In Atlanta, where payroll-padding has been a way of political life, it’s never clear to politicians whether the greater risk to their job security comes from alienating property owners or alienating city workers — hence, the 8-7 vote to raise taxes. All 15 seats on Atlanta City Council and the mayor and council president are up for election this November.
The California debate is essentially contained in the comments of two California Congressmen, U.S. Rep. Brad Sherman (D-Los Angeles) and U.S. Rep. Kevin McCarthy (R-Bakersville).
“It’s not that California got itself into trouble and wants the federal government to bail it out,” Sherman told the Associated Press. “California wants the federal government to do for a fee that which Wall Street would do for a fee if Wall Street wasn’t broken.”
Said McCarthy: “You’ve got many states throughout this country, you’ve got many cities that are in tough financial problems, so they will all come for help.”
Washington is owned by Democrats. California is owned by Democrats. San Francisco’s Nancy Pelosi is Speaker of the U.S. House, which is owned by Democrats. Expect a bailout.
The answer is “no, taxpayers shouldn’t start bailing out failed cities and states.” But we will.