Marshall Auerback Dissects State Budget Woes on BNN
Thought that deficit hysteria is only a problem on the Federal level? Think again. The Governator is in deep trouble, and so are “48 out of the 50 states”, which are all facing fiscal crises, Marshall points out. Part of the problem is due to falling tax revenues and state politics that require balanced budgets, but the larger problem is a lack of chutzpah in Congress to pony up some Federal assistance to state budgets. Lacking that, however, California is taking matters into its own hands and issuing IOUs, which now hold some weight. They can be used to pay state taxes — exactly what gives currency value. That’s the difference, for example, between the “normal piece of paper” Marshall holds up and the “piece of paper with a dead president on it.” The dead president can be used to pay Federal taxes. After all, we’re not on the gold standard anymore, Toto.
Meanwhile, although Marshall concedes that there is political dysfunction in California’s government, now is not the time for Schwarzenegger to give the smack down. “When you have a fire going on, and a fire engine comes up to your house to put out the fire, you don’t complain because of the design of the fire engine.” Put out the fiscal fire. Then give the truck a new coat of red paint.
Check out the full interview here.
And check out some of Marshall’s latest posts:
The Summer(s) of Our Discontent