Thread: Can the U.S. Afford to Let California Fail?

Can the U.S. Afford to Let California Fail?

By Kevin O'Leary / Los Angeles
Friday, Jun. 19, 2009


California's budget crisis threatens the welfare of thousands of the state's residents David McNew / Getty

With his round face and sad eyes, Oracio Sandoval, 33, sits at a Los Angeles County welfare office in Carson, Calif., armed with a thick pile of job-application forms. Out of work since January, Sandoval is struggling to stay afloat financially. Married with two children, he and his wife used to make $3,000 a month. Now they rely on her $800 from Starbucks and their CalWORKs payment of $250. "It's not much, but it helps. We just barely make ends meet for rent and the bills. I am not sure how much longer we can go on like this," he says.

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Sandoval, like many of California's 39 million residents, is caught up in the pain of the worst recession in 50 years and a state's flailing attempt to balance its books by making brutal cuts in programs long seen as essential. The Sandoval family is but one of more than 154,000 welfare cases in Los Angeles County. Governor Arnold Schwarzenegger says the state should abolish its welfare program. Doing so would save $1.3 billion and rip a large gaping hole in the safety net that now keeps more than 500,000 California families like the Sandovals out of homeless shelters.

(Read "With a New Budget, Now Californians Brace for the Pain") http://www.time.com/time/nation/article ... 94,00.html

States across the nation are suffering the effects of lost tax revenue in the worst economic downturn since the Great Depression. California's woes are similar and different in kind, played out on a grand scale in a state that boasts the world's eighth largest economy and a Hollywood star in the lead role. After voters rejected a slew of convoluted budget-balancing measures, the governor has proposed cuts to programs that would make California more like a struggling Third World state than 21st century America: welfare subsistence benefits would end, 1 million poor children would lose health care, college aid for the state's best and brightest would be phased out, nonviolent prisoners would be released, hundreds of state parks would be shuttered, and thousands of teachers would lose their jobs.

(Read about the 25 people to blame for the financial crisis.) http://www.time.com/time/specials/packa ... 50,00.html

"California could become the only state in the First World without subsistence benefits for poor children," says Frank Mecca, executive director of the County Welfare Directors Association of California. If California ends CalWORKs, the state's welfare-to-work program, it would save $1.3 billion but lose three times that amount in federal money. (Since President Bill Clinton's reform, welfare has been run by the states, which receive block grants from the Federal Government that they spend as they wish. Mecca says no other state has ever said no to the federal money, nor has one proposed a flat-out elimination of welfare for families with children.)

(Read "Can Marijuana Help Rescue California's Economy?") http://www.time.com/time/nation/article ... 56,00.html

As California faces a $25 billion budget shortfall, which it must resolve by July 1, the state is on the brink of financial disaster, and ripples from its fiscal collapse could adversely affect both the nation's economic rebound and, potentially, the Federal Government's credit status. The Republican governor and GOP legislators say they will not raise taxes, especially after Schwarzenegger and six Republican legislators joined a budget deal with Democrats in February that combined deep cuts and $12.8 billion in higher taxes. Now the budget shortfall has spiked again as state tax receipts have dropped 27% from a year ago. Democrats and advocates for programs under the knife will fight the cuts, but neither money nor time are on their side.

In addition to its multibillion-dollar deficit, California faces a severe cash-flow crisis and state controller John Chiang warns that the state could run out of money in July. California has the worst credit rating among the 50 states, so its leaders have pressed the Obama Administration and Congress to act as a co-signer on the state's borrowing. As with AIG, California officials argued, the state is too big to fail. "A fiscal meltdown by California ... would surely destabilize the U.S., if not worldwide financial markets," state treasurer Bill Lockyer wrote U.S. Treasury Secretary Timothy Geithner on May 13. Yet experts say such action by the Federal Government, while not a bailout, could possibly endanger the nation's AAA credit rating. Without short-term assistance, California could plunge deeper into chaos and become a drag on the nation's economic recovery.

(The Page: "California Budget Deadlock Broken.") http://thepage.time.com/2009/02/19/cali ... d=rss-page

This week, however, the Obama Administration said it was not going to do anything to help California right now, believing that the state should try to get its budget mess in order first. There are good reasons for the Treasury not to rush to California's aid. If it backstops Sacramento, rewarding the state's bad behavior, it would set an example for other states to follow. A nightmare scenario: the Federal Government backs California's loans, which leads to a downgrading of the Treasury's credit rating and the unnerving of the global credit markets. Spooked, the Chinese government, which currently bankrolls a large portion of the U.S. deficit, decides to take its money elsewhere. The ripples from California's crisis would then extend far beyond the Sandovals and other families on the wrong end of the budget ax.

(See TIME's gallery of Businesses Bucking the Recession") http://www.time.com/time/specials/packa ... 47,00.html

http://www.time.com/time/nation/article ... html?imw=Y

Oh, Shock and Awe! You mean to tell me that California is still part of the United-States? Dang learn something new every day. :P

Originally Posted by Bulldogger

Oh, Shock and Awe! You mean to tell me that California is still part of the United-States? Dang learn something new every day. :P

LOL! By the looks, sound and smell of it, you'd think California had already been annexed into Mexihole.

It's so sad, it really is. I feel so sorry for California. I grew up in the midwest, beautiful, simple, down to earth, plain, happy but unexciting compared to the thought of California. I think California because of the ocean and Disneyland and palm trees and the weather, was a Dream Land for most of us. We all wanted to go for a visit to see it and experience it, but growing up most of us like my family didn't have the money.

As an adult on business I had several opportunities to visit California. It was as I had imagined it but through the eyes of an adult instead of a child. You could see and feel even then over a decade ago the last time I was there, the mounting pressures of the massive population growth from immigration.

I wondered then why they were allowing it but didn't think much more about it until it started happening in North Carolina where I live now. This is the first place I've experienced it, and it's extraordinary once it starts how fast it proliferates.

California is in a heap of trouble, more trouble than their government probably even knows. It's a crisis of monumental proportion and inexplicable how a state, one of our most free-thinking and at one time best educated populations with more engineers, professors and advanced degree folks than probably any state in the country could have missed such an obvious error in judgment and allowed this overpopulated underemployed dilemma from illegal immigration to bankrupt the richest state in our country.

There's an old saying, where California goes, so goes the nation. Some may cry for Argentina, but I cry for my California. I want California to do everything it must to Save Our State! Yes, I don't live in California, have never lived in California, but California is all of our state. It's our Dream Land State, it's Redwoods, and the Pacific, and the Valley, and Hollywood, and Football, and Basketball, and people in shorts when everyone else is stuffed in wool suits, who smile and say hi whether they know you or not and give you a Gallon Jar of Garlic as a going away present to take home with you when you've been out to visit them.

I love California. I love the people of California. I love the history of California ... the pioneers who didn't stop in Missouri and say "enuf already", but plowed on across Kansas, the Rocky Mountains and a Desert and those who didn't die on the way reached what anyone would call a Paradise on Earth. May God Bless California during this terrible time, and by so doing Bless Us All.

Very well said, Judy. My feelings exactly. I'm a California native and have had to stand by and watch the slow, painful death of my beloved state. No matter how we have fought to keep her head above the sewage that has seeped in over our Southern Border, she keeps sinking deeper to the point that this state is no longer recognizable as the rich, vibrant Golden State it once was.

We'd be fooling ourselves to go on believing that our government isn't aware of how much trouble California is truly in. This has been done by design with the help of this government and the government of Mexico, because just as you said, "Where California goes, so goes the nation." California has collapsed under the weight of illegal immigration and as these parasites, (illegal aliens/their political supporters) suck the life blood out of the taxpayers of this state, they move on like ticks jumping off a dead dog to find fresh bleeding hearts to support their selfish, parasitic agendas in other states and so goes the nation. They've bled the compassion, their welcome and the tax base of California dry.

Our elected representatives have stood in the way of every piece of legislation that Californians have tried to pass to gain control of our border and to stop illegal immigration and to stop rewarding it financially. Our elected officials have fought hard to allow, condone and reward the raping of California's resources and its citizens. Californians have NO VOICE and no one to represent them. Illegal aliens, particularly from Mexico are the chosen people and are rewarded for committing fraud against the state, the citizens of California and the Federal Government. Be a citizen of this country and try any one of those and see how far you would get. Believe me they wouldn't shower you in financial, educational and medical aid and benefits as they do for illegal aliens...they'd lock you away for an eternity.