Friday, July 25, 2008

California Budget Crisis

California has a deficit estimated at $15 billion. The state is legally bound to balance its budget, but it never does so by resorting to various gimmicks.

California requires a supermajority to approve any budget. Republicans have said they will not accept any budget that involves tax increases and they have enough votes to block any budget. Arnold has suggested raising money by selling the rights to future lottery money, but that is far from sufficient.

His latest ploy is to demand that the state pay workers the minimum wage so long until a budget is passed. As a student of supply-side economics, I know that the best way to get out of a recession is to ruthlessly cut government spending. Business will be so impressed that it will invest even though he cannot afford to buy anything.

If that does not work, Arnold probably have some friends in special effects who could do the trick.

4 comments:

PGL said...

Nice snark about cutting government spending to get out of a recession. But follow what a lot of us CAL economist bloggers - and friends such as Kevin Drum and Mark Kleiman - have been complaining about since the replacement governor took the office from Gray Davis. ARNOLD spends like an FDR Democrat and taxes like a Reagan Republican. Oh wait - those were ARNOLD's own words. Alas - ARNOLD is as poor excuse of a leader as George W. Bush.

Michael Perelman said...

His proposed spending has been mostly accepting the legislators' proposals, except that he is now calling for a very wasteful water project and even more spending on prisons.

Anonymous said...

Want fries with that budget crisis?
Instead of cutting jobs and services to solve California’s budget crisis, why not eliminate the state water subsidies that allow McDonalds and Colonel Sanders to market burgers and chicken for a dollar? Reducing the consumption of water by the livestock industry would benefit almost every economic facet of the California economy.
Read my September 14, 2008 OpEdNews article

Original Content at http://www.opednews.com/articles/Want-fries-with-that-budge-by-Robert-Singer-080917-108.html

charles said...

Why not tap California's hugh offshore oil fields?
California would become a net oil exporter and the budget problems would disappear.