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.
