It's IOU time for California!

Here in California we have Democrat-controlled California legislature that loves to raise taxes and refuses to slash spending. We also have a stubborn Republican minority that refuses to spend a dime on new taxes. In addition, we have a constitution that requires a 2/3 majority to pass the budget. What does this equal? Gridlock! This goes on pretty much every year, even in boom times, and is usually resolved by questionable tactics such as borrowing against future years.

The chickens have come home to roost this year though, and there are no sleight of hand maneuvers with a $26 billion (and growing) shortfall. Now we're running out of money, and have started issuing IOUs until the budget gets worked out...but this could take a while. Meanwhile California's credit rating is threatened to getting cut to junk status.

Years of fiscal mismanagement combined with a recession led to this, and it's looking grim. Think you'd be able to do what it takes to balance the budget? Try for yourself here. First, remember that the Republicans can block any tax increases, so try and just make cuts. Then see if you can add taxes to make it work. It's not easy!

George Will has a good article that argues that the federal government is in danger of heading down California's road, with oppresive taxes, subservience to organized labor, and excessive regulation.