• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • The TARP Bailout Parade: Is California Next?

    During yesterday’s Senate Banking committee TARP oversight hearing, Sen. Jim DeMint (R-SC) asked Treasury Secretary Tim Geithner:

    So it’s your understanding that you have $700 billion to use permanently as you see fit?

    Secretary Geithner replied:

    I’m not quite sure ‘permanently’ is right.

    So then what is the right word? Does the Obama administration recognize any end or limit to what they can do with their $700 billion TARP slush fund? As the Los Angeles Times reports, California appears next in line for the bailout parade:

    “A fiscal meltdown by California . . . would surely destabilize the U.S., if not worldwide, financial markets,” State Treasurer Bill Lockyer wrote in a May 13 appeal to U.S. Treasury Secretary Timothy Geithner.

    Lockyer and Schwarzenegger say last fall’s federal bailout legislation gave the Obama administration legal authority to back the state’s loans. Now is the time to exercise that power, they say. Under their plan, the federal government would guarantee private lenders that they would be paid — with taxpayer money from across the country — if California defaults on its loans. The idea is to take the risk out of lending to California so the banks will put up the funds.

    “The state’s view is, if they can bail out the auto industry, they can do this for us,” said attorney Robert Feyer of Orrick, Herrington & Sutcliffe, which is advising the state on the matter.

    It is far past time to end the bailout mentality. The TARP must end.

    Posted in Economics [slideshow_deploy]

    14 Responses to The TARP Bailout Parade: Is California Next?

    1. Just Say No, WV says:

      Bailout CA? Does anyone even consider becoming fiscally responsible? Why shouldn't a State sit down – look at the checkbook balance – see what it owes or will be paying and what is coming in and make the necessary cuts………..!!!! This is ridiculous – every American citizen at least sometimes checks their inflows and outflows…why should I bail you out if I am being responsible and you are not….some lessons need to be learned the hard way so as to not be repeated. Govenator…make good on your promises to reduce expenses – not raise taxes……

    2. Worldbfree4me says:

      While agree that California is in a huge heap of trouble caused by the mentality "Spend money on things I like" and "Don't raise my taxes." We the people cannot allow that State or any State in the Union to fail period. While southern States like Texas and Louisiana maybe more solvent now, its inevitable that the problems the coastal States face now begin to manifest here in the south and midwest.

    3. Pingback: » Financial News Update - 05/21/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    4. Barb -mn says:

      WOW! I thought Ahhnode was much stronger then this!

    5. Pingback: Fallout From California’s No Vote « Justbkuz

    6. Grace, Florida says:

      So maybe California pools their money with another state and they become one. They could hook up with Oregon – they are both very liberal and all the Socialcrats from both states will be very happy with each other. Maybe that's what is going to happen to allot of states.

    7. Michelle, California says:

      The "Left Coast" is failing because of their liberal policies and spending. Do not bail us out. We here in California voted not to spend more of our money and not to increase taxes to bail out the state government. If the federal government steps in, our vote is negated and more money will be taken from us anyway through federal taxes. It will also be taken from all of you who do not live in California. We need to make all levels of government fiscally responsible. DO NOT BAIL US OUT!!

    8. Scott, North Carolin says:

      I agree with Michelle and extend a Red Carpet welcome for her and family to North Carolina.Move here while you can.We need more clear thinking people here anyway before we have a Kalifornia Problem of our own.

    9. LW, Newport News VA says:

      Thank you, Michelle from California. Where does this madness stop? We were told our economy would go down the tubes if we didn't support the first TARP. It HAD to be approved the VERY next day. It took over a week to ram it through Congress, and nothing happened,(we're all still here)except a precident was established for spending money the U.S. doesn't have. This country is bankrupt right now. I say we hold the federal government to the same standards we're each held to with our personal credit. Oh, wait. I forgot. Now those of us who have good credit and pay bills on time and in full are now going to be penalized to pay for those who don't. I feel like I'm in some cartoon world where up is down and left is right and the sky is pink. How do we get back to responsible credit for the government (at all levels)? Any good ideas? Call your representative or senator. Not that they're going to listen, but…

    10. Tim AZ says:

      The reason North Carolina and Arizona and other low tax states risk becoming like California is that most of the people leaving California to escape the confiscatory taxes at every level that they voted for were caused by their insatiable appetite for entitlements. Most are unable to or refuse to detox once they have moved to a lower tax state. They then demand these same entitlements in their new home State. It's a cancer that eats away at ones dignity and self worth. Creating a laps of personal responsibility and the obligation to take care of ones own self. Of course a politician will grant them entitlements for votes and campaign contributions spreading the cancer. Until the people of every state are consumed with socialism that destroys the essence of the human. Finally we are all equally miserable.

    11. Metalchemist says:

      I was born and raised in Calif. I SAY DO NOT BAIL THIS STATE OUT.

      There are too many problems in this state that ARE NOT being addressed by the SELF SERVING politicians of this state.

      The State of California VOTERS NEED to CLEAN HOUSE on the Federal level as well as on the State level.

      This state NEEDS TO ELECT politicians that WILL represent the CITIZENS of this state. The REQUIREMENT is to HAVE A SPINAL CORD. Not to CAVE IN to political special interest groups,

      or be self serving fools. To do What is best for the CITIZENS

      of the state. DO NOT THROW MONEY AT PROBLEMS THAT ARE NOT ADDRESSED. THEY WILL NOT GO AWAY, ONLY WORSEN…..

      LOOK AT CHRYSLER G.M…. Get the point.

      DO NOT BAIL OUT CALIFORNIA.

    12. elle, oregon says:

      Hey,

      Not all of us in Oregon are like or want in the same basket as California! The only thing they think we are good for is a free lunch since we don't have a sales tax and they come up here to shop so they don't have to pay their sales tax (not that I blame them)and we might have some water they need.

      California has all those movie stars that make all that money, one now heads the state, whom you would think might have a sympathetic ear/pocketbook to ease those woes. OH wait, they all voted for Obama—-never mind–.

      For those of you who don't want a bail out, have you told your reps? Telling us won't do any good. Oh, and have you tightened your own belt? Cut back on "I want", paid off debt, saved, become less expectant on the government or unions and more reliant on yourself? Once you allow them to "take care of you" and become dependant they have control over you, your life and whatever else YOU choose to let them. If you truly want to take things in a different direction it has to start with you. Kettle, pot, black.

    13. Marshall Hill MI. says:

      This is the Example of poor Budgeting!We do not

      need to reward this group!

    14. Landshark, New Jerse says:

      WRITE, EMAIL, FAX, TWEET, YOUR CONGRESSMAN. RAISE ABSOLUTE HELL AND TELL THEM, HELL NO ON A CALIFORNIA BAILOUT. OTHERWISE YOU AND YOUR CHILDREN WILL WIND UP HOLDING THIS BAG.

      From a tax attorney and former D.C. wonk who knows.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×