Quote:
Originally Posted by Villages Kahuna
All that seems to raise a couple of questions...- Should the U.S. government provide financial assistance, such as guaranteeing bond debt, for California or any other state?
- If the federal government did agree to backstop a state such as California with taxpayer's money from the other states, should the federal government become involved in the governance of the state? As an example, if the federal government were to guaranty California bonds, should it assume a role of establishing and approving a state budget that would assure that the fed guaranty would not be called upon? Should the federal government establish what the state should spend money on? Should the federal government become involved on the revenue side by dictating additional state taxes which might be necessary to balance the state budget. Basically, should the federal government supercede the California legislature because of their proven incompetence in managing the state's financial affairs.
Just a couple of questions to be considered.
------------------------------------------------------------------------------
My answers:
Question #1 - NO
Question #2 - Not applicable
I provide these answers with the full understanding that the economy of the State of California is the equivalent of the seventh largest country in the world. And if California were to default on it's debt obligations, or be unable to issue additional debt, it would be the equivalent of a bankruptcy that would make that of GM and Chrysler pale by comparison. Financial failure for an entity as large as California would have disastrous effects on the economy of the U.S., if not the world. There is no Chapter 11 for state governments. |
No.
The California taxpayers have enough money to bail themselves out. They just need to be convinced of the necessity.
