California’s $7 Billion Bailout? | Citizens Against Government Waste

California’s $7 Billion Bailout?

The WasteWatcher

When Congress debates California’s requested $7 billion bailout, instead of looking at the benefits it could bring California, they first need to look at the source of the problem and understand the reasons why the state is in such trouble.  Citizens and business owners in California are outraged that the state government continues to raise taxes while refusing to eliminate wasteful spending.

To sum up California’s situation, a CNN article on October 3, 2008 quoted Governor Arnold Schwarzenegger (R) explaining that “California may need a $7 billion emergency loan from the federal government to pay for teachers’ salaries, nursing homes, law enforcement and every other state-funded service.”  In the midst of California’s crises, it is disturbing, but instructive to review California’s spending history.   

For instance, although California is struggling to pay for its basic necessities like education and welfare, they will still spend $3 billion over ten years on embryonic stem cell research.  On November 3, 2004, an MSNBC article stated “Californians came down on the side of stem-cell research by passing a controversial bond measure that devotes $3 billion to human embryonic stem-cell experiments and comprises the biggest-ever state-supported scientific research program in the country.”  At this juncture, it is clear that money could be better used elsewhere.

Indeed, California’s lackadaisical use of federal funds is one reason for its current situation.  In a report released on December 12, 2008 entitled 2008: Worst Waste of the Year, Sen. Tom Coburn (R-Okla.) highlighted some of the ridiculous ways that states spend taxpayers’ money.  In his report, he writes that in 2008, “the San Diego school district misused $3 million in federal funds intended for nutrition programs to assist low-income students by spending it on bonuses for employees leaving the district.”

A June 10, 2009 article from the Imperial Valley News states that “in an effort to encourage state employees to report wasteful government practices, Gov. Arnold Schwarzenegger today announced a new feature called “Waste Watchers” on his web site.”  Instead of just using the name, it might helpful if Gov. Schwarzenegger actually read and used the information on the CAGW website.

Because of the current economic downturn, many states are experiencing similar financial problems.  The federal government cannot bail out every state.  California created the mess it is in through irresponsible spending; throwing $7 billion at the problem is not going to fix the situation.  The Governor has proposed certain budget cuts to help fix the state’s financial crises and those budget cuts should be thoughtfully considered and implemented by the California State Assembly before asking for federal government bailouts.  A few of the proposed budget cuts are to close down state parks for the summer, which would save $70 million, decrease spending on drug rehabilitation programs, which would save $789 million, and requiring  235,000 state employees to take a five percent pay cut, saving $470 million.

The Obama administration issued a statement on June 16, 2009 that reaffirmed its stance on the issue when White House spokesman Robert Gibbs said “California is unable to borrow its way out of its immediate financial trouble by issuing debt because of its budget gap.”  A May 22, 2009 Los Angeles Times story quoted the Obama administration saying that “raising taxes and cutting spending are steps that can be taken by California officials to avert a financial meltdown.” 

California first needs to focus on its inept management of the state’s budget and eliminating unnecessary spending and lowering the state’s budget deficit before they ask for a $7 billion federal “emergency loan.” 

Logan Campbell

Sign Up For Email Updates

Optional Member Code