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.