In a ridiculous move coming from what used to be the country’s wealthiest state, California has decided to issue IOU’s instead of cash to its creditors. The state is also set to issue IOU’s to some of its government funded programs which help the elderly and the disabled citizens of the Golden State. Governor Schwarzenegger believes it is unconscionable that the state legislature will not provide him with a bill that fixes the state’s financial problems without significantly raising taxes. Basically the governor is asking the legislature to cut spending in any number of areas where taxpayer money is being eaten up by liberal do-good projects. Democrats in the legislature don’t seem to understand why it is important to bring spending in line with revenue, so you get what you have today. Republicans want to cut spending to bring it down to revenue levels. Liberals want to increase taxes to bring state revenue up to current spending levels. This is really quite simple if you think of it in terms of your personal finances. If you spend more than you make, you eventually need to either make more money, or cut back on your spending, or you run out of money. This exact same scenario is happening to California right now. As usual, the conservatives want to spend less of your money, while the liberals want to spend even more of your money through more taxes. “The state is out of money. We need to tax the people more! Cut spending on my pet projects? Never.”, has long been the battle cry of California liberals. Faced with economic disaster, these same liberals still don’t seem to get it. This leaves one to wonder if any of them in the legislature ever took Economics 101 in school?

Source: Financial Times