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Feds Reject Plea for Calif. Bailout

Aid ruled out for now as state warns of fiscal meltdown

By Rob Quinn, Newser Staff

Posted Jun 16, 2009 6:09 AM CDT

(Newser) – The federal government has rejected pleas for emergency aid from top California officials, reports the Washington Post. State officials warn that its budget crisis is approaching the point of a "fiscal meltdown" that will cause massive cuts and deepen the state's recession. But the Obama administration fears bailing out California will open the door for similar demands from other states.

State lawmakers say California is "too big to fail," and warn that a lengthier recession in California would delay the rest of the country's recovery. Insiders say federal officials, including Tim Geithner, haven't ruled out helping California if the situation worsens, but will ensure any help comes with conditions to protect taxpayers. Geithner has stressed that states should take responsibility for balancing their own budgets.

[Images (2)]

[Quotes (1)]

A statue of a golden bear is seen outside the California Exposition and State Fairgrounds in Sacramento. The fairgrounds may be sold to help balance the state's budget. (AP Photo/Rich Pedroncelli)

Gov. Arnold Schwarzenegger speaks in front of a chart showing the state's budget deficit aid at a joint session of the Legislature at the Capitol in Sacramento earlier this month. (AP Photo/Rich Pedroncelli)

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I can't speak for the president, but when you've got the 8th biggest economy in the world sitting as one of your 50 states, it's hard to see how the country recovers if that
state does not. - Rep. Zoe Lofgren, head of California's congressional delegation

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COMMENTS

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Showing 3 of 11 comments

Chudluv

Jun 17, 2009 4:28 AM CDT

So, how would you turn CA into the Ultra-Business Friendly State in the Union?

Fondue

Jun 16, 2009 6:58 AM CDT

Wow. Yes, GWB and Paulson et al "Bailing out the damn banks" has opened the door for these bailouts. This all started last year. Just who were you calling an "effing as-hat"? I do believe it was Queen Palin that said, "We need to be aware of the creation of a fearful population, and fearful lawmakers, being led to believe that big government is the answer, to bail out the private sector, because then government gets to get in there and control it," she said. "And mark my words, this is going to be next, I fear, bail out next debt-ridden states. Then government gets to get in there and control the people." (Wed. 06/04/2009 in Anchorage). I accept your apology only if it was intended for me.

kokuaguy

Jun 16, 2009 4:59 AM CDT

Great point-- wasn't Prop 13?

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Feds Reject Plea for Calif. Bailout