Fallout: The Financial Crisis

Who’s responsible for California now?

Bob Moon Jun 16, 2009
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Fallout: The Financial Crisis

Who’s responsible for California now?

Bob Moon Jun 16, 2009
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TEXT OF STORY

Kai Ryssdal: There was some news out of Washington today that brought to mind one of the more famous newspaper headlines from the 1970s. Talking about the Ford administration’s response to New York City’s budget problems back then, the Daily News went with “Ford to City: Drop Dead.” Now it’s California on the fiscal ropes. And the Obama administration is telling the state not to count on a federal bailout. Here’s our senior business correspondent Bob Moon.


BOB MOON: California officials had hoped the Feds would make up for some of the state’s expected $24 billion deficit. But former Governor Gray Davis, who faced his own budget woes a decade ago, agrees lawmakers here can solve their own problems.

GRAY DAVIS: I think the federal government is saying, “You show us you have the mettle to do something in Sacramento. Don’t just come whining to us. We’re not going to abandon you, but you have to go first.” That’s how I read their message.

Davis points out his successor, Arnold Schwarzenegger, has predicted revenue near where it was when Davis was governor.

DAVIS: We can afford the level of government we had in 1999, which as I recall was pretty good. Now, is it painful? Absolutely. But life is all about choices.

The question is whether lawmakers will have the political will to make those choices. Governor Schwarzenegger was sounding doubtful but hopeful earlier this month.

GOVERNOR ARNOLD SCHWARZENEGGER: People are writing California off. They’re talking about the end of the California dream. They don’t believe we in this room have the courage and the determination to do what needs to be done or that the state is even manageable. Let’s prove all the pundits wrong.

At San Francisco State University, political science professor Graeme Boushey fears it’s coming down to brinkmanship.

GRAEME BOUSHEY: You know, I’ve heard from the right, Republicans who really think this is the step towards, you know, drowning government in the bathtub. Right? Forcing government to become smaller. On the other hand, there are Democrats I’ve heard talk who actually welcome the budget crisis, because they think the state will be forced to revise how we go about budgeting, to enable California’s Democratic majority to raise taxes and to expand government more easily.

So could the state end up running out of money to pay its bills? Boushey hopes not, but says he can’t rule it out.

In Los Angeles, I’m Bob Moon for Marketplace.

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