California has decided to demonstrate how quickly a state can dig a hole and swallow up most of the money the national stimulus package is supposed to put into its local economy through municipal aid and private sector financing.
If the new bill to be signed by the President today is meant to save or create three million jobs, the bleeding out of the economy may simply make that impossible.
For the federal government program to work, California, the country’s most populous state, can hardly afford to watch tens of thousands of people put out of work with that number growing each day.
But, the state government is doing what it can to ruin its local economy. It will lay off 20,000 workers because of revenue shortfalls which are projected to create a $42 billion budget deficit, about 5% of the value of the entire federal stimulus program.
California will also halt all public works projects which is likely to cause lay offs in its private sector.
The California debacle shows just how hard it will continue to be to get out in front of the effects of the recession.
Douglas A. McIntyre
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