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
What if?
Subscribe to:
Post Comments (Atom)
5 comments:
I don't see how it can continue. Yes, one in six people work in the public sector (the same as East Germany), but that leaves 5 in 6 of us that don't. At some point we will tire of them shitting in our faces and do something about it.
I have to believe that.
I have a number of friends who are teachers who read my brainfarts and I don't think of them as leeches. But yeah, the dam has to break soon. It's not like we're demanding that government employees be sent to the poorhouse.
Obama's "stimulus" plan was essentially a bailout for states. Over 70% of the jobs saved or created were government jobs, at least in MA.
I think there would be massive opposition (as in "regime change")to targeted bailouts of individual states like CA. When it gets that brazen it becomes too much for the common man to bear. I saw a change in election dynamics in the recent Scott Brown election. People are hurting financially- they're having to cut back and go without. They're not happy to see their public sector brethren protesting wage or benefit freezes.
Don't hold your breath for any meaningful change anytime soon. The change that comes, will hit the middle class hardest....SS and Medicare will be means tested and subjected to more taxes, check out income taxes pre Regan 'cause that is coming back, and inflation of course to add more burden to everyone. This will all be done in the name of some emergency or other, but it will creep into our lives soon.
Hi, Lou! As I read your post, I keep wondering how many folks even remember the cause behind the federal loan given to NYC in the 1970s? It involved a lot of short-term debt coming due at absolutely inconvenient times. They had to rely on the dreaded teacher's union in NYC to help avoid the BK filing.
From what I've seen of California's continual fiscal morass, they aren't even close to that position. And make no mistake, the Bondholders get first call on the taxpayer's money, no matter what CA's constitution says about Education getting it first.
Post a Comment