California still does not have a budget. The Republicans have taken a vow not to raise taxes. To pass a budget will require a few Republican votes, but whoever wavers will be severely punished by the Republicans. The Republicans are holding out to get existing rules trashed, put on permanent spending caps, and cut spending. Governor Arnold has a "compromise," which is bad, but the Republicans strongly reject it, holding out for a complete capitulation. Arnold also proposes to put almost all state workers on minimum wage. This brilliant idea is put on hold by a court challenge.
Schumpeter is of interest here:
Schumpeter, Joseph A. 1954. "The Economic Crisis of the Tax State." International Economic Papers, 4; reprinted in Schumpeter, Joseph A. 1991. The Economics and Sociology of Capitalism, ed. Richard Swedberg (Princeton: Princeton University Press): pp. 99-140.
101: "The spirit of a people, its cultural level, its social structure, the deeds its policy may prepare -- all this and more is written in its fiscal history. ... The public finances are one of the best starting points for an investigation of society."