California state Treasurer Bill Lockyer wants Treasury Secretary Timothy Geithner to give TARP money to the state so it can pay its short-term bills. Oh, and he’d also like money sent to “other financially strapped states and local governments which face a severe cash flow crunch.” California may have the biggest congressional delegation of any state, but he’d like a little more support on Capitol Hill from, say, New York or New Jersey. If you don’t send the money, Lockyer says, “there could be devastating impacts on the ability of the State or other governments to provide essential services for our citizens.” Fires won’t be put out, schools won’t open, etc., etc.
Let’s try a translation into English. Why can’t California borrow short-term money as it has in the past to smooth out its fiscal cycle (expenses go out all the time; tax revenues tend to come in bunched up at deadline time)? Because lenders see that the public employee unions, working through pliable Democratic legislators and (alas) Governor Arnold Schwarzenegger, have piled so many obligations on the state government that it’s not going to be able to pay them.
As I put it the other day, the public employee unions have been feeding on the state’s bounteous private sector for decades. Now, with California boasting the nation’s fourth highest unemployment rate in March, that body is starting to look like a carcass, but the hyenas want to keep gnawing away. In those circumstances lenders may reasonably fear that any attempts to get repayment will be crammed down by the Obama administration in the same way it crammed down the Chrysler bondholders, to channel more money to their paymasters at the public employee unions. The precedent is there: unions come before secured creditors.
Bill Lockyer has been in the hyena care and feeding business for a long time. He’s a Sacramento politician who was elected to represent an East Bay assembly district in 1972, as a 31-year-old McGovernite, and was reelected in 1974, 1976, 1978 and 1980. He was elected to the state Senate in 1982 and was reelected in 1986, 1990 and 1994. He got his law degree from, McGeorge Law School in Sacramento while serving in the state Senate. Term limited out of the Senate, he was elected attorney general (convenient, getting that law degree) in 1998 and 2002. Term limited out of that office, he was elected state Treasurer in 2006.
He made national headlines in 2001, during the Enron crisis, when he said, “I would love to personally escort [Enron CEO Kenneth Lay] to an 8-by-10 cell that he could share with a tattooed dude who says, “Hi, my name is Spike, honey.” This naturally elicited some adverse comment from liberals and conservatives who have been working to prevent prison rape, and Lockyer issued an apology. Lay’s conviction was overturned after his death.
Lockyer is a key player in the political apparat which has destroyed California’s public finances and ravaged its private sector economy. Now he wants TARP money to keep the game going. A good investment?
