Frugal Café Blog Zone

Posted By Vicki McClure Davidson on August 12, 2010

Arnold Schwarzenegger, California's 'Governator' can't pay California's bills... IOUs aren't the same as cash, Arnie

When California’s Gov. Arnold “The Governator” Schwarzenegger offered IOUs for California’s government bills in July 2009, it was met with displeasure and outcry by banks, vendors, and contractors.

Imagine that.

So, of course, Schwarzenegger is trying it again.

Maybe Californians should all follow the Governator’s lead — instead of paying the IRS or the electric company or the mortgage lender with a check, mail in an IOU.

See how far THAT will get you.

Reported by NBC Los Angeles, We Want Our IOUs:

State Controller John Chiang said Tuesday that without a state budget, California’s government would be unable to pay its bills in late August (or maybe early September). That means issuing IOUs to some people. Possible dates for IOUs could be either Aug. 27 or Aug. 31, when big payments to schools are due, according to this schedule on the controller’s website.

This announcement, in the upside down world of California’s badly broken budget politics, felt almost like good news. With lawmakers and the governor making little progress on the budget — and showing little interest in making that little progress — the threat of IOUs seemed to provide hope that there’s a deadline out there, somewhere in the near future, that might force these guys to pass a budget.

Or maybe it won’t. Democratic legislative leaders and Gov. Schwarzenegger have all raised the possibility that there may not be a budget agreement this summer — or even this fall — if their demands aren’t met. Given the intransigence, maybe the controller should try issuing IOUs sooner rather than later, as a test of whether a failure to pay the state’s bills might be a spur to real budget action.

Bloomberg reported this in June:

California has been among the states worst hit by the U.S. recession, which pushed up unemployment and cut into tax collections. California’s Legislature and Schwarzenegger have struggled to close the gaps that emerged, a task made more difficult by the state’s constitutional requirement for support from two-thirds of lawmakers to raise taxes or pass a budget.

In July, with Schwarzenegger and lawmakers unable to agree on ways to balance the budget, Chiang began issuing IOUs to state contractors and others creditors in order to conserve cash. About $2.6 billion in promissory notes were issued, according to Chiang’s office.

While California typically borrows money in the second or third quarter of the year and pays it back when taxes are collected later, officials said in 2009 that such a step would be too costly if investors weren’t guaranteed that the debt would be repaid.

This year, California will be able to raise money through such a note sale if a “timely and credible budget” is passed, Chiang said.

Hint: Stop paying welfare entitlements to the 3 million illegal aliens in California. Then see how quickly the state will get out of debt.

Additional related reading:
Gateway Pundit: It’s Time to Admit It: Obamanomics Are a Complete Disaster and US TAXPAYERS ARE FUNDING MOSQUE CONSTRUCTION and Democrats: Say, Let’s Exempt Rich People in Blue States From Tax Hike! and Recovery Slumber: Consumers Stop Consuming and Obama July Deficit of $167 Billion Tops Bush Deficit For Entire Year of 2007: and As Michelle Returns From Spanish Extravaganza Obama Cuts Food Stamps to Nation’s Poor and IT’S OFFICIAL: Barack Obama Is Worst Jobs President Since Great Depression and After US Economy Loses Another 125,000 Jobs Obama Says: “We’re Heading in the Right Direction” (Video) and Custard Store Owner: Biden Went Off On Me, I Was Shocked and Biden Admits Obama Administration Won’t Be Able to Create Lost Jobs and Private Sector Lost Nearly 10 Million Jobs in Last 3 Years – Public Sector Gained 720,000 and Republican Sandoval Leads Rory What’s-His-Name By 18% In Nevada Governor’s Race and Rep Paul Ryan: By Every Objective Measure The Stimulus Has Failed (Video) and Radical Far Left Dem Jan Schakowsky Says Public Option Will Reduce Deficit and DISASTER CONTINUES: Obama Administration Will Break Their Record 2009 Budget Deficit and Unreal. Obama Touts “Enormous Progress” Urges Reporters to Focus on Broken Economy and Glenn Beck Discusses Blatant Dishonesty at Far Left Website Think Progress
Radio Vice Online: In United States, 17% work for the government
Frugal Café Blog Zone: More Bleak “Hopenchange”… Record-Breaking: More Than 780,000 Families in Illinois Receiving Food Stamps and Obama & Reid, Two of a Kind: Responsible for Nevada’s Broken, Decimated Economy, Highest Rate of Home Foreclosures in Nation, Angle Slams Reid (video) and Bad News: Police Layoffs of Up to 30 Percent for East St. Louis… Blame It on Obama’s Terrible Economy and More Bad News for Dems: 75% of Americans Say Free Market Principles Better Than Government Manipulation & Interference… Obama’s Approval Index Drops to -19 and Rasmussen’s Prez Approval Index for Obama… Déjà Vu at Dismal Minus 17, Unemployment Improves Only Because Americans Have Lost Hope, Stopped Looking for Work and “Duh” Files: Obama’s Approval Drops Like a Metamorphic Rock in Arizona… Disapproval of POTUS Worsening on Economy, Illegal Immigration, Job Markets and Oops: VP Biden’s Campaign Owes Treasury $219,000 Due to “Sloppy Bookkeeping” & Excessive Contributions… Biden’s Still in Charge of Watchdogging Wasteful Stimulus Program and “Skin in the Game” Barack-Style– First Family’s Dog Bo Flies to Obamas’ Maine Vacation on a Separate Jet and Oh, Joy! Cocaine Addicts Studying Chinese Meditation, Team Obama Hands Over $410,625 of Tax Payers’ Money to Make It Happen and Clowns in DC: Team Obama Messes Up Unemployment Payments Again… Overpayments Have Doubled Since Last Year’s Overpayments
Another Black Conservative: Washington adds another $165 billion to deficit in July alone
The Clue Batting Cage: Welfare
The Daily Beast: Top Obama Adviser Romer Quits
Politics Daily: Christina Romer Quits Council of Economic Advisers; Sources Cite ‘Frustration’
Lynn Sweet, Chicago Sun-Times: Christina Romer, Obama top economic adviser quits; infighting to blame?
Camp of the Saints: Rally ‘Round The Flag: Message From A Friend
Nice Deb: The Summer of Our Discontent
Ace of Spades HQ: Obama Two Points Higher Than 39%
Telegraph: With the US trapped in depression, this really is starting to feel like 1932
Doug Powers, Michelle Malkin: CBS Reports Obama’s Unemployment Benefits Flip-Flop
FOX News: East St. Louis To Lay-Off Nearly 1/3 Of Police Force

Categories: Business & Economy, Government, Illegal Immigration, Social and Political Climate
Tags: Arnold Schwarzenegger, bankrupt, California, California debt, citizens against government waste, debt, economic depression, economic free-fall, economy, Gov. Schwarzenegger, Governator, government mistakes, government overspending, governor, illegal aliens, IOUs, John Chiang, liberals, welfare