The Federal Government fires back

Governor Schwarzenegger has laid down the gauntlet to the Federal Government.  Claiming that California is chronically short-changed due to an inaccurate federal funding formula, Schwarzenegger is demanding $6.9 billion to help plug the current $21 billion budget deficit. If California is unable to secure the additional federal aid, then the Governor has threatened to make painful cuts to a variety of statewide social programs.  Thus far, however, the Federal Government has not been very receptive.

After having already distributed billions of dollars in federal stimulus funds to the golden state last year, state and federal legislators are growing impatient with Schwarzenegger’s bold requests.  State legislator, Rep. Devin Nunes, stated, “He wants everybody to like him instead of making the tough decisions. It’s kind of silly to come to the federal government.” Senator Dianne Feinstein said that Schwarzenegger’s behavior was “not constructive”.  Senator Barbara Boxer added that the Governor had distorted the facts by claiming that California had been insufficiently reimbursed for prisons, healthcare, and other social programs. Speaker Pelosi appeared a bit miffed, saying “The idea that any state can say ‘This is my shortfall, pick up the tab,’ is not one that would work well in Washington, as you can imagine.”

Both sides of the conflict appear to make legitimate claims.  In defense of Governor Schwarzenegger, California has likely been robbed of billions upon billions of dollars of federal reimbursement, largely as a result of the Alternative Minimum Tax (AMT).  In addition, since Senator Nelson was able to secure a sweetheart deal for his home state of Nebraska during the healthcare debate, isn’t the Governor justified in seeking preferential treatment as well?

In defense of the federal government, though, California is already being showered with $31 billion of federal stimulus money through 2011. Yet, it continues to run back-breaking budget deficits. Also, the federal government is running a $1.4 trillion deficit of its own, which means additional stimulus packages will have to be financed by borrowing more from China or simply printing the money out of thin air, both of which hurt the American people.

While both sides of the conflict appear to make legitimate claims, both sides also display a health dose of hypocrisy. California receives tens of billions in federal stimulus funds, but it still can’t come anywhere close to balancing its own budget. Sadly, we’ve come to the point where the prospect of balancing the state budget without federal taxpayer money isn’t even a legitimate possibility anymore.  By continuing to borrow and spend beyond its means, the state’s lack of accountability lays the foundation for years of prolonged misery.  

The Federal Government, on the other hand, preaches about fiscal responsibility, yet it burdens the American people with trillion dollar deficits and a devalued Dollar.  It hasn’t balanced its own budget for the last ten years and is expected to add another $9 trillion of debt by 2019. It scolds California for demanding preferential treatment while engaging in sneaky backroom deals to pass healthcare legislation by paying off certain Senators and their respective states.  In addition, the Federal Government rewards Wall St. bankers with $700 billion of taxpayer money, yet balks over $38 billion to the most critical state in the Union.

Ultimately, one could argue that both sides are to blame.  Neither California, nor the Federal Government, possesses the slightest idea how to balance a budget.  Both sides recklessly borrow and spend, burdening hard working families with unfathomable debt for generations to come.  Until Sacramento and Washington DC learn how to manage their money more wisely, these type of conflicts will persist, and the American people, not the politicians, will continue to pay a dear price.