Mercury Rising 鳯女

Politics, life, and other things that matter

Tell me again, why was Gray Davis recalled?

Posted by Charles II on June 30, 2008

Michael Marois, Bloomberg:

As the most populous U.S. state, with a gross domestic product that’s No. 8 in the world, California is so strapped for cash that it must consider a short-term, $10 billion loan to cover its bills. The widening deficit means the financing may be about 0.85 percentage point more expensive than five years ago, when Davis lost his job over a budget gap twice as large as the $17 billion deficit the state now faces. That’s an added $8.5 million on every $1 billion borrowed…

At the same time inflation is quickening, the Treasury and local governments are stepping up borrowing amid expanding budget deficits. The U.S. government’s shortfall for May totaled $165.9 billion, more than in all of fiscal 2007.

California, as the biggest borrower in the $2.66 trillion municipal market, bears the brunt of investor discord.

The state sold $1.5 billion of bonds last week, paying 5.3 percent on the portion due in 30 years, up from 4.78 percent on similar securities issued a year ago, according to data compiled by Bloomberg….

Under Schwarzenegger, a 60-year-old Republican, California began 2007 without a budget deficit for the first time in six years. By the end of the year, he was forced to declare a fiscal emergency.

The state borrowed $7 billion through short-term notes last October. Three months later Schwarzenegger ordered mid-year budget cuts and $3.2 billion of further borrowing to plug a gap that swelled to $14 billion in one year.

California has done horribly under Republicans. Reagan and the anti-taxers destroyed the fiscal foundations, Wilson and the nativists undercut education and filled the prisons, and Schwarzenegger has borrowed the state into near-bankruptcy. What’s not to like?

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One Response to “Tell me again, why was Gray Davis recalled?”

  1. Always remember that the recallers lied themselves into power. They kept yammering about the “$38 billion deficit” when in fact Davis had already got it down to $8 billion and was poised to eliminate it within the next fiscal year.

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