There's a sense in Washington that it is still is too early to present a complete and detailed bailout plan for California, according to Paul Krugman, the Nobel Prize-winning economics professor at Princeton University who also works as a columnist for the New York Times.The question is moot. Of course this will happen. Arizona, Nevada, Florida, New York, New Jersey... they'll all be bailed out, only to repeat the cycle next year. The most important functions of government are meeting payroll and keeping the pensions funded. Besides, what's one hundred billion or two added to the deficit this year? Peanuts.
"It doesn't make sense for Congress to come up with a detailed plan as there's no default yet," Krugman said.
"Another problem with having a bailout plan now is that, before the federal government spends its money saving California, Californians have to understand how serious the situation is," Krugman added. "Otherwise there will be no change of behavior and therefore this will be just money thrown away, as they will simply come back later for more."
Apart from that, Congress has just presented a plan for California to start cutting its budget deficit. And many officials said that they should wait for results before anything else.
Wednesday, February 10, 2010
Paul Krugman on the California Bailout Plan
Posted by Lou Minatti at 8:21 PM