The Pruitts of Southampton redux

I inaugurated this blog with a post comparing California's fiscal mess to that old Phyllis Diller sit-com, "The Pruitts of Southampton," about an ex-rich socialite, dead broke, still trying to keep up the appearance of her once-lavish lifestyle.

Governor Schwarzenegger and the California legislature continue living the Pruitt lifestyle despite an $11.2 billion budget deficit that must be closed. The Democrats have proposed equal tax increases and spending cuts--$8.2 billion each. Gov. Schwarzenegger's plan is similar. The Republicans are adamant against tax increases but don't propose spending cuts sufficient to balance the budget--a typical ploy for Republicans, who pretend to be anti-tax heroes while letting somebody else do the dirty work of figuring out what to do with spending.

Projections of the growing fiscal crisis put the spending vs. revenue gap at $28 billion within 19 months. Of course, here in the real world there could be no such gap. The state would simply run out of money and stop spending. Period. It would stiff its vendors by not paying them; they in turn would stop providing goods and services until the state paid its outstanding bills. State employees would be laid-off; the lights would go out; the doors would shut. Somebody would put up a big "Out of business" sign on government buildings in Sacramento. Thus the fiscal crisis would end. This happens daily in the private economy. Why can't a state go belly up? Life would go on. Life might be better. Californians would get a chance to start over from square one. You don't get many opportunities in life to start over fresh, so citizens might jump at the chance. Why prop up a bloated, tyrannical, bankrupt government? Why settle for so little? Try something new. Give it a shot and see what happens. Is that the scent of a constitutional convention I smell in the air?

America is now officially in recession. Yes, the National Bureau of Economic Research has just discovered that we have been in recession since December, 2007! Good of them to keep up with current events. America faces a federal budget deficit approaching $2 trillion for this fiscal year alone. The current federal debt is $10 trillion. America is broke; California is broke. Perhaps the only really exciting question is this: In the great race to insolvency, who goes belly up first, California or America?

Read about the fun here