Gov Schwarzenegger Begs White House for Bailout Money

January 10, 2010

(ChattahBox)—Should the White House bail California out of a mess of its own making? The ungovernable state of California is looking to the federal government for a solution to its budget woes. Republican Gov. Arnold Schwarzenegger released his 2010-11 budget that, includes a request for $6.9 billion in federal funds to make ends meet. Last May, while mired in a severe financial crisis, due to the recession and massive home foreclosures, the beleaguered state asked the White House for a portion of TARP funds, which request was refused. Now, the state is again seeking a federal bailout. And of course, thanks to Sen. Ben Nelson’s (D-NB) antics of holding the health care reform bill hostage, until he secured several concessions, including having the federal government pay for Nebraska’s mandated expansion of Medicaid, Schwarzenegger is demanding that his state’s expansion of health insurance for the poor be paid for as well.

California has been facing a crisis of epic proportions long before the current recession. And unless fundamental changes are made at the state legislative level, and its constitution rewritten, no amount of federal funds can solve the state’s problems. California’s financially bankrupt and deadlocked government has reached crisis levels, from a deadly storm of out of control voter initiatives and referendums, combined with a legislature that can’t pass a simple state budget.

Schwarzenegger’s proposed $82.9 billion budget also calls for $8.5 billion in cuts and $4.5 billion in alternative funding. If federal aid is not forthcoming; the governor proposes deep cuts of $2.4 billion in social welfare programs for the neediest of families, when greater numbers are losing their homes and their jobs.

Schwarzengger is also asking that the White House pay for the state’s federally mandated Medicaid and special education programs using federal stimulus funds. Federal mandates for social welfare aid, “force us to spend money that we do not have,” said the governor.

Republicans praised the proposed cuts, but Democrats have vowed not to support a budget that hits the neediest the hardest. Jean Ross, executive director of the nonprofit California Budget Project, said “These cuts would come at a bad time because there is growing demand from families who are struggling to make ends meet.”

It’s unlikely the dysfunctional California legislature would be able to enact a budget, before the state’s remaining resources run out. The peculiar laws of California, requires a super majority of two thirds approval in both houses for both tax increases and budget approvals, ensuring complete dysfunction.

The only solution to California’s problems may be a federal receivership. Gov. Schwarzenegger and a team of state legislative leaders plan to travel to Washington next week, to lobby for a federal bailout.

See the Wall Street Journal for more.


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