California Is Too Big To Fail

Opinion by Gilbert Mercier, NEWS JUNKIE POST

California has a $24 Billion budget gap, if this monumental problem is not addressed in July the Golden State will be effectively bankrupt.

If California was a country it would be the 8th largest economy in the world, one out of every eight Americans lives in California. The stated holds 55 electoral votes. It is also America’s bread basket for fruit & vegetable crops. President Obama should keep that in mind before refusing Federal financial help to the State, or he could have a bad surprise when he runs for re-election in 2012.

According to a statement made last week, the Obama administration is not willing to help. It appears they do not want to set a precedent because they have other troubled states begging for bailout money from the Federal government.

The real problem of California is a systemic one, namely the legislative structure. The Golden State has to come up, urgently, with a massive legislative structure reform. What makes California practically impossible to govern is the 2/3 majority needed in both Houses of the State legislature to pass a budget or raise taxes. This predicament means that the state is in constant gridlock unless the Democrat majority, some Republicans, and of course the Governor Schwarzenegger agrees. The problem is that they usually don’t agree on much of anything. The Democrats drag their feet on budget spending cuts, and the Republicans block any tax increases.

The only way out of this crisis is to do both: Cut spending and increase tax revenue.

What is even more disturbing is the lack of solidarity towards California from other Americans. A recent Rasmussen poll found that 66% of voters nationwide opposed the Federal government guaranteeing California’s loans. 48%, in the survey, even went further by saying it would be better to let California go bankrupt than to hand the state a Federal bail out.

Letting California collapse financially should not even be an option for anyone, especially not for President Obama. In the long term, when he seeks re-election in 2012, if he doesn’t win California he will not win the White House. Just something to think about before he says “no” to some form of Federal bailout help for the Golden State.