The Wall Street Journal’s Stu Woo had it right when he wrote yesterday, "If California resorts to IOUs, it will be the latest humiliation for the cash-strapped state." Key on the word humiliation. In my recent travels, I heard much snickering and disbelief about California’s fiscal situation.
The most intriguing thing about California’s drive to another in a long line of humbling fiscal moments is the timing. Controller John Chiang predicted that if nothing changes California would run out of money in late October.
Right before the November 2 election.
Just imagine the chaos that would erupt around the campaigns for governor and other offices if the election played out under the cloud of a bankrupt state.
How would the candidates respond? We would certainly get a measure of the candidates performing under crisis. Here’s one hint for the candidates in the governor’s race: Don’t suspend your campaign to help solve the problem. That strategy did not work for Senator John McCain during the financial meltdown prior to the 2008 presidential election.
So far, the candidates for governor have not revealed a specific roadmap to fix the state’s financial problems. However, if the state runs out of money a week or two before the election the voters won’t take vague rhetoric for answers.
No one wants to see California merchants holding contracts with the state or state employees suffer by receiving IOUs for payment. Last year California issued 450,000 IOUs. Banks said they would honor them – for a while. This year the bankers may not be so understanding.
It is not just the politicians who seem unmoved by the funding calamity. The general public seems unaffected, or unaware, of the potential fiscal tornado twisting this way.
But, according to the sages, nothing focuses the mind like a crisis. Perhaps we should pretend we are at that crisis point of no money right now and come up with a solution instead of waiting for the actual crunch time days before the election.