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cashinmattress

Schwarzenegger Compares California's Woes To Euro Zone

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Terminator at it again

(Reuters) - California Governor Arnold Schwarzenegger on Friday compared the state's predicament to that of weaker euro zone economies and called for scrapping the state welfare system to close a $19.1 billion budget gap.

The movie star turned governor said California, the most populous U.S. state with an economy that would be the eighth largest in the world, faced the same dilemma of dismal growth and budget gaps as Greece, Spain and Ireland.

California's government has been living beyond its means and has little choice but to cut $12.4 billion in spending over the remainder of this fiscal year and the next, Schwarzenegger told a press conference in Sacramento.

"You see what is happening in Greece, you see what is happening in Ireland, you see what is happening in Spain now," Schwarzenegger said, referring to swelling deficits and austerity measures that have concerned investors worldwide. "We are left with nothing but tough choices."

Democrats and Republicans, who must muster a two-thirds majority to pass a budget, are likely to ignore many of his suggestions in a debate which, if it follows recent history, could drag on for months.

Democratic State Senate President Darrell Steinberg told Reuters that lawmakers in his party, who control both chambers of the legislature, could not support Schwarzenegger.

"The cuts are absolutely unacceptable," Steinberg said, adding that instead of slashing spending Schwarzenegger should help Democrats delay business tax breaks.

Republican Assemblyman Jim Nielsen, the vice chair of the budget committee, said both sides felt the "absolute imperative" for immediate action and praised Schwarzenegger's decision not to push for new taxes.

"That would simply fund the broken budget at the higher levels that are not sustainable," he said.

Thanks to stronger than expected revenue early in the year and new finance rules the state will be able to pay debt coming due in May and June, although it could face problems late in the summer, Schwarzenegger said.

Investors have scooped up recent offerings of California debt with high yields, convinced by state payment guarantees.

Meanwhile schools have cut teachers, social services are drying up and most state employees face regular furlough days.

The spending cuts in Schwarzenegger's proposed $83.4 billion 2010-2011 budget include eliminating the CalWORKS welfare program and many child care programs and cutting funding for local mental health services by 60 percent.

California's budget deficit had been estimated at $19.9 billion at the beginning of the year.

Since then some revenues have come in higher than expected but opportunities to make cuts have also dried up, concerning credit agencies who now rate state debt only a few notches above speculative, or "junk," status.

Schwarzenegger in January acknowledged his proposed spending cuts for health and welfare programs were "draconian." But the state already has some of the highest income and sales tax rates of any U.S. state.

"There is something wrong with our system. That is what I'm trying to tell people. There are going to be people screaming for more taxes -- we've done that," Schwarzenegger said. "Let's stimulate the economy and let's create the jobs. That's the important thing."

He called on lawmakers to tackle growing costs for the state pension fund and to reform its tax system, which relies heavily on volatile personal income and capital gains taxes for revenue.

Outside the event, protesters denounced Schwarzenegger's plan, chanting "Shame on you". Handicapped activists said they feared losing caregivers funded by the state.

"I might as well just die," said wheelchair-bound Carmen Rivera-Hendrickson, who relies on daily in-home health care.

I'm surprised this fame seeking steroid monkey jumped on the political bandwagon. His legacy will be blackened for this choice to become the economic sharp stick for Californiawood.

Edited by cashinmattress

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People still don't want to see the system for what it is one huge elaborate fraud completely dependent on growth.

Too much demand has been brought forward from the future and now we have no money to even service the costs.

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What gets me is that the deficit is " only" $19bn ,.......... about 3 weeks worth of gordons fiscal incontinence,...... Just 3 WEEKS .....! and as for the debt !!!!!!!!!!!!!

Handicapped thrown onto the streets for gods sake !

Sort of puts it into some perspective , does'nt it ?

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People still don't want to see the system for what it is one huge elaborate fraud completely dependent on growth.

Too much demand has been brought forward from the future and now we have no money to even service the costs.

...and milked by a self-serving elite of bw ankers, politicians and 'civil servant' mandarins IMPO.

They have enslaved and destroyed us in a different way to the previous 5,000 years of invasion, conquest and slavery.

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People still don't want to see the system for what it is one huge elaborate fraud completely dependent on growth.

Too much demand has been brought forward from the future and now we have no money to even service the costs.

The growth thing is handwaving cobblers

People don't tend to draw from their future heavily (even if they can) unless there is a penalty for not doing so; unless they lose heavily by not doing so. The real estate market provides that penalty. It corners people into becoming indebted.

Edited by Stars

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...and milked by a self-serving elite of bw ankers, politicians and 'civil servant' mandarins IMPO.

They have enslaved and destroyed us in a different way to the previous 5,000 years of invasion, conquest and slavery.

Exactly - they NEVER mention the real cause >>>

That Manhattan stripped the pensions and state 'investments' to the bone with false promises/utterings that they would make them grow!

That's where all the state money went over the decades, in excess charges charged 'upfront' and false share/investment dealing!

Edited by erranta

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He called on lawmakers to tackle growing costs for the state pension fund and to reform its tax system, which relies heavily on volatile personal income and capital gains taxes for revenue.

This is where it all starts to become clear.

It the civil service pension costs eating up all the tax money.

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Meanwhile schools have cut teachers

This where the neo liberal train hits the buffers- their obsession with ideological purity re taxation of the rich blinding them to the obvious fact that the social infrastrucutre of their society is a vital component in their free market nirvana. Exactly how is damaging the education of their young going to promote the long term viability of their industries going forward?

I saw an interview with Michal Moore the film maker talking about the death of the dead tree press- and he pointed out that the newspaper owners consistently supported low tax administrations, putting pressure on the education system who were the same people teaching their future consumers to read! :lol:

A more literate population might have been more likely to stay with print based media that could offer them more depth and detail than the online alternative- so in his view the newpaper barons had effectively cut their own throats by impeding literacy levels in the population to whom they were trying to sell their product- the law of unintended consequences at work.

Edited by wonderpup

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A more literate population might have been more likely to stay with print based media that could offer them more depth and detail than the online alternative

I take your point, but I disagree that print based media offers more depth and detail than the on-line alternative.

The internet provides vastly more depth and detail than print, sure the on-line offerings of the newspapers can seem little more than a parody of the printed version; when you're on-line you can find far more on any topic than any publication can offer. Critically you can find opposing views that highlight and expand a topic more than reading several newspapers with divergent political leanings and geographical biases.

However I still find it more comfortable to read something in print than something on a computer screen.

Edited by sleepwello'nights

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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