Toxic Assets. Over the past year, our government has spent trillions to relieve the economy of their burden. We’ve been told time and time again that by giving $20,000,000,000 in TARP funds to Bank of America, for example, the feds were going to “fix” the mortgage crisis, and the “toxic loans” that it entails. But bailouts, like the $150,000,000,000 given to AIG, have done nothing to revive economic growth.
Bailing out banks and lending institutions have not made life easier for anyone. AIG still lost $4,400,000,000 last quarter. Bear Sterns still had to merge with JP Morgan Chase out of financial necessity. The “toxic assets” are still in the same poor condition they were in before. The Dow Jones Industrial Average closed 4348.3 points lower on May 22, 2009 than it did on May 22, 2008, and Chrysler has filed for Chapter 11 bankruptcy and closed a plurality of dealerships.
However, banks and private companies have begun to seem kind of boring for the government. Now they have aimed their crosshairs at independent states.
Today’s target? California.
With more than $5,000,000,000 in borrowed funds, $21,300,000,000 in cumulative debt, the second highest personal income tax in the nation, and a perpetual spending spree, California looks like a juicy “toxic asset” for the government to take control of, and, after all, isn’t California just “too big to fail?”
There are a number of reasons why California should not be “bailed out.” First and foremost, with its own more than $21,000,000,000 in debt, California has no room for a bailout. If it can’t pay back what it already owes, why should the Federal Government expect it to pay back any more money? The fact is another mountain of additional debt (and I say mountain because the bailout will probably be bigger than the $150,000,000,000 AIG loan) will only burden California more, and if California is unable to pay the extra debt off, which is inevitable, they will come back to the Feds asking for more money.
California looks more like a candidate for reorganization in bankruptcy.
Secondly, if the Federal Government bails out California, what will be the consequences? Will the Federal Government gain the ability to kick out and replace state “CEO’s” (governors) and other state officials like they did at GM? A Federal bailout is harmful to the independence of California, just like similar handouts have been harmful to the private sector’s say in the auto industry, the banking industry, and all others who have touched bailouts.
Thirdly, the Federal Government has often talked about how bad loans that people could not repay created this financial mess. If that was a major issue with the private sector during the financial meltdown, than “bailing out” institutions going south could be the downfall of the federal government.
California’s overspending — as Grover Norquist put it “California does not have a $21.3 billion deficit, it has a $21.3 billion spending problem.” — it’s overtaxing — someone with $50,000 in taxable income is taxed out of more than $2,000 (if there are no possible deductions) — and its excessive borrowing — I mentioned $5,000,000,000 (and the number is perpetually growing) — make it a financial hazard to anyone wanting to loan to it.
If there were a “hazmat” team for states with bad finances, they would be swarming all over California. California’s economic woes, while bad today, will continue (after all, every year spending in California increases). Any money given to the State of California will only be wasted, and lost, on California; and don’t forget, the money being given to California is the money of each and every tax-paying American. Not only is the Federal Government going to hurt itself financial, but the American people will take a major blow.
Finally, America’s Federal Government must remember that it is not immune from the same problems. It too, can be hurt by the blows of overspending, high taxes, and borrowing. Spending more money that we do not have as a country is only destructive to our financial well being on the whole. Some ask is it logical; I ask is it feasible. Our Federal Government, reliant on the taxpayer, has already bit off more than it can spend. Our more than $10,000,000,000,000 deficit is only going to be increased by the impossibility of California ever paying back a loan. What’s more the Federal Government needs to let the States, simply by logical principle, fight their own battles when it comes to their budgets. The more the Federal Government steps in, the more it becomes common, and the more it becomes common, the more the States lose their Constitutional rights, abilities, and powers.
It is my firm belief that the facts, and the truth behind California’s perpetual economic problems, its continual fiscal issues, and its extremely destructive tax code are certainly not in the best interest of America and, more importantly, not in the best interest of her citizens.
America is a nation of free States, and for the government to stick its hand into the free and independent pillars of this Union is destructive and harmful to it. The solution to the entire problem is simple: The people of California must vote the government officials who have contributed strongly to this financial mess out of office.
California was best described by its Legislative Analyst’s Office’s only statement at the end of this year’s state budget analysis; “Was Ugly. … Getting Uglier.”