Paul Ryan's Growth Plan

Larry Kudlow ,   The Caller

Larry Kudlow is the host of CNBC’s “The Kudlow Report.”

Of all the discussion about Paul Ryan’s big-bang budget plan, the element I like best was caught in this Wall Street Journal op-ed title: “The GOP Path to Prosperity.” In other words, it’s a growth budget. It has plenty of spending cuts, but it also has significant pro-growth tax reform.

Obsessing over the debt is not by itself a policy. Advancing the economy and setting the stage for more job creation is a policy. Mr. Ryan kept an important dose of Ronald Reagan in both the spirit and reality of his plan. Limited government, lower tax rates, and deregulation (of energy) will all promote the path to prosperity.

The other big-picture thought is that the fiscal-policy ball is moving in the right direction. Most of what is being proposed faces a rocky political future. But the direction is unmistakable: less government, lower taxes.

This really started back in December with the extension of the Bush tax cuts and the withdrawal of the trillion-dollar omnibus continuing-resolution spending bill. It continues into the new year with new CRs. Whether Speaker Boehner gets $30 billion or $40 billion in cuts, the direction is clear: lower spending.

Just before the election, John Boehner told us he would stop the bad stuff. Looks like he has. And now Mr. Ryan keeps the drumbeat going with a 2012 budget that would cut $179 billion from the president’s budget baseline. In 2013, Ryan would take down over $220 billion. Over ten years, Ryan would lop off $6 trillion. The key point is not the actual numbers, but the direction of the numbers. Spending is coming down.

Ryan included the thinking of Dave Camp (the Ways and Means chair) on tax reform, which is a 25 percent top rate for individuals and businesses with a full-scale reduction in all the tax-credit, K Street, flotsam-and-jetsam loopholes. That’s very pro-growth.

Ryan also includes deregulation of energy for drill, drill, drill — another big growth and jobs measure.

The health care entitlement picture is going to be very muddled, and the outcome is impossible to figure. So I’ll leave that aside for a moment. The only thing Ryan neglected to do was highlight the need for stable money to stop the damaging Fed rollercoaster. But with so much on his plate, I can understand that omission for now.

Ryan basically stole the budget bacon from President Obama, who should have put this kind of plan in his State of the Union. He didn’t. And now he’s got to play catch-up. The Senate Democrats are utterly hopeless. But the public mood is still where it was last fall: less government spending and borrowing. Ryan delivers on that and then some with his tax-cut growth booster.

The cause of the debt bomb is too much spending and too little growth. Ryan attacks this with new spending rules and tough policy decisions. He also provides the new flat-tax reform incentives to grow the economy.

So if we look at the debt bomb as a share of GDP, what will happen — if Ryan prevails even modestly — is the numerator of debt will steady while the denominator of growth is unleashed.

We will be fine. I can almost hear Paul Ryan saying, “I will not allow America to become Greece.” Amen.

Larry Kudlow is the host of CNBC’s “The Kudlow Report.”

The empty-office presidency

BY ED MORRISSEY, HotAir

My new column for The Week focuses on the, er, unique handling of the launch of a new war by Barack Obama.  Before we get to my take on Obama’s absence on a South American tour during the start of hostilities against Libya, though, let’s first get Dana Milbank’s takeon what he casts as Obama’s tactical error.  Ducking out of town while the bombs started falling, Milbank writes, allowed Republicans to paint Obama as weak:

But the “weak leader” charge gained traction over the weekend, as Obama chose to launch the attack on Gaddafi’s forces while on an excellent adventure in South America with his family.

At about the moment the Tomahawk missiles began to rain down on Libya, Obama was joking with Brazilians about Carnival, the World Cup and the Olympics. Rather than hearing an Oval Office address announcing the new war, Americans got word from the president in a scratchy audio recording. As thousand-pound warheads pounded Libyan forces, Obama was kicking a soccer ball, seeing the sights and watching cowboys in sequins.

It was perilously close to George W. Bush’s My-Pet-Goat moment, when then-President Bush continued reading a storybook with children on Sept. 11, 2001, after he was told that the second World Trade Center tower had been hit. Bush later said he was trying to maintain calm; likewise, White House officials tell me the decision to proceed with the South America trip was made in part to convey that the Libya bombardment was not a major military action.

Obama administration officials calculated that he would take a hit for proceeding with the voyage. But they appear to have been surprised by the force of the weakling complaint, coming not just from usual suspects such as Karl Rove but from liberals such as my Post colleague Richard Cohen, who saw Obama “quite literally distancing himself from the consequences of his own policy.”

Sorry, Dana, but this isn’t comparable to Bush’s My Pet Goat moment.  For one thing, Bush may have waited a few minutes to finish up with the kids, but he didn’t absent himself from the response for four entire days.  Bush didn’t leave the country to finish reading the book to the kids, either.  Second, the 9/11 attack came as a surprise to Bush, while Obama launched this war himself and left the country knowing full well it would take place in his absence.

Let’s talk about that decision for a moment, too.  The White House wants to argue that the trip had been planned for months, and that they deliberately chose not to reschedule it as a show of strength.  Milbank buys into that, too:

Since his earliest days on the campaign trail in Iowa, he has made clear his aversion to the flavor-of-the-day news cycle, instead measuring his progress toward a few broad-brush goals, such as American competitiveness and America’s standing in the world. If something — like, say, the uprisings in the Middle East — doesn’t fit unambiguously within his big goals, his instinct is to brush it off.

“I know everybody here is on a 24-hour news cycle,” he told reporters once. “I’m not. Okay?”

The problem for Milbank and the White House is that they have already established a precedent on postponing previously-scheduled trips when emergent situations occur, as I point out in my column:

Obama had scheduled his tour of Latin America months earlier, but the same was true of his trip to Indonesia in 2010. That trip got postponed twice as domestic politics intruded on the president’s schedule. First, Obama pushed the date from March 2010 to June 2010 in order to push his health care reform bill to final passage. In June, he postponed the trip again, this time to take more control of the Gulf oil spill. It’s hard to argue that ObamaCare ranked as a higher priority than going to war, and yet Obama refused to delay his trip to Rio de Janeiro, where photo ops depicted him playing soccer in the street and watching children dance in the first two days of his war.

Recall that the trip to Indonesia wasn’t just your typical foreign junket, either.  Obama had insisted that only a man of the world such as he could heal the breach between the West and the Muslim world, and he pledged to leverage his unique life story to bridge that gap.  The speech in Cairo was part of that strategy, as was the trip to the most populous Muslim nation — Indonesia.  It carried considerably more weight for Obama’s global strategy than a trade tour of South America.  Yet Obama postponed that trip twice, with one postponement occurring so that he could flack ObamaCare a little more to get Congress to pass it.

That’s an interesting set of priorities.  Obama refused to leave the country whenObamaCare was at risk, but refused to postpone a trip while putting the US military in harm’s way in Libya for the first time.

Note too that Obama wasn’t the only one out of the country, either:

And where was the defense secretary at this time? The second in civilian command of the military also left town on the 20th. Gates was scheduled to leave on the 19th, but he waited a day to “keep tabs” on the military action in Libya. Did he fly to consult with a member of the military coalition imposing the no-fly zone to coordinate efforts, as Obama announced two days earlier? Not exactly; Gates flew to Russia, which had to be talked out of vetoing U.N. Resolution 1973.

Once again, let’s remember the stink that arose when Chris Christie and his lieutenant governor Kim Guadagno both left New Jersey for vacations at the end of last year and a freak snowstorm locked up the Garden State.  Liberals screamed about the dereliction of duty in having both executives out of state when an emergency arose.  Now we have the two men in civilian command of the military out of the country when starting a new war.

My column concludes that most presidents would have welcomed the opportunity to demonstrate leadership at this moment.  Obama preferred to play soccer in the streets and do a samba chair dance instead.

ONE-THIRD OF A FRENCH FRY SHORT OF A BIG MAC MEAL

John Hinderaker, Powerline.com

How can we put the current debate over the federal budget into a tangible perspective that anyone can understand? This morning I read a post by Dan Mitchell of the Cato Institute in which he criticized the Washington Post's characterization of the $6 billion cut in the most recent continuing resolution as "slashing" the federal budget:

Federal spending has soared by more than $2,000,000,000,000 during the Bush-Obama years, pushing the burden of government up to $3,800,000,000,000, yet the reporters who put together this story said that an agreement to trim a trivially tiny slice of 2011 spending would "slash the budget."

As Charlie Brown would say, good grief. This is the budgetary equivalent of going on a diet by leaving a couple of french fries in the bottom of the bag after bingeing on three Big Mac meals at McDonald's.

That struck me as a pretty good analogy. I wondered: if you do the math, what part of a Big Mac Extra Value Meal would a $6 billion budget cut represent?

The arithmetic is pretty simple, due to the extensive nutrition information that McDonalds makes available online. A Big Mac Extra Value Meal has three components: a Big Mac, a large order of french fries, and a medium soda. The McDonalds site tells us that a Big Mac has 540 calories, a large fries has 570 and a medium Coke has 210, for a total of 1,320 calories.

Meanwhile, the federal budget is currently around $3.8 trillion, which means that a $6 billion cut represents one 633rd of the total. What would be an equivalent cut in a Big Mac Extra Value Meal?

One variable is not readily available online; that is, how many french fries are there in a large order? To answer that question, I went to a nearby McDonalds at lunch time, paid for a large order of fries, and counted them. There were 87. (I counted fries regardless of size, but did not count the hard bits in the bottom of the container.)

This allows us to complete the calculation. If there are 570 calories in a large order of fries, and 87 fries per order, each french fry, on the average, contains 6.5 calories. One 633rd of the total calorie content of a Big Mac Extra Value Meal is 1,320/633, or 2.1 calories. That equals almost exactly one-third of an average sized french fry.

So, consider: if you were to go on what the Democrats consider a starvation diet, and "slash" your calorie intake to exactly the same degree that the Republicans' $6 billion cut has "slashed" the federal budget, you would do the following. Go to McDonalds and order a Big Mac Extra Value meal. Eat the Big Mac. Drink the Coke. Eat 86 of the 87 french fries. Carefully take the last fry and bite off two-thirds of it. Put the remaining one-third of one fry back in the bag.

If you seriously think that you have just "slashed" your diet, you are a Democrat. Most likely, an overweight Democrat.

Pretty sad, our strongest allies consistently rebuffed, critical international situations ignored, and our "Ditherer-in-Chief" fiddles with his image as the world burns... and we can do nothing but watch this excruciatingly slow train wreck unfold.

A little more... from Express.co.uk

By Anna Pukas

INEFFECTUAL, invisible, unable to honour pledges and now blamed for letting Gaddafi off the hook. Why Obama’s gone from ‘Yes we can’ to ‘Er, maybe we shouldn’t’...

Let us cast our minds back to those remarkable days in November 2008 when the son of a Kenyan goatherd was elected to the White House. It was a bright new dawn – even brighter than the coming of the Kennedys and their new Camelot. JFK may be considered as being from an ethnic and religious minority – Irish and Catholic – but he was still very rich and very white. Barack Obama, by contrast, was a true breakthrough president. The world would change because obviously America had changed.

Obama’s campaign slogan was mesmerisingly simple and brimming with self-belief: “Yes we can.” His presidency, however, is turning out to be more about “no we won’t.” Even more worryingly, it seems to be very much about: “Maybe we can… do what, exactly?“ The world feels like a dangerous place when leaders are seen to lack certitude but the only thing President Obama seems decisive about is his indecision. What should the US do about Libya? What should the US do about the Middle East in general? What about the country’s crippling debts? What is the US going to do about Afghanistan, about Iran?

What is President Obama doing about anything? The most alarming answer – your guess is as good as mine – is also, frankly, the most accurate one. What the President is not doing is being clear, resolute and pro-active, which is surely a big part of his job description. This is what he has to say about the popular uprising in Libya: “Gaddafi must go.” At least, that was his position on March 3.

Since then, other countries – most notably Britain and France – have been calling for some kind of intervention. Even the Arab League, a notoriously conservative organisation, has declared support for sanctions. But from the White House has come only the blah-blah of bland statements filled with meaningless expressions and vague phrases. Of decisive action and leadership – even of clearly defined opinion – there is precious little sign.

What is the Obama administration’s position on the protests in the Gulf island state of Bahrain, which the authorities there are savagely suppressing with the help of troops shipped in from Saudi Arabia? What is the White House view on the alarming prospect of the unrest spreading to Saudi Arabia itself? Who knows? Certainly not the American people, nor the leaders of nations which would consider themselves allies of America.

The President has not really shared his views, which leads us to conclude that he either doesn’t know or chooses, for reasons best known to himself, not to say. The result is that a very real opportunity to remove an unpredictable despot from power may well have been lost. Who knows when or if such an opportunity will come along again?

Every day for almost the last two months our television screens, radio broadcasts and the pages of our newspapers have been filled with the pictures, sounds and words of the most tumultuous events any of us can remember in the Arab world. The outcome of these events, once the dust has settled, could literally change the world. Yet Obama seems content to sit this one out. He has barely engaged in the debate. Such ostrich-like behaviour is not untypical of the 49-year-old President who burst through America’s colour barrier to become the first African-American to occupy the White House.

Two days after taking office in January 2009, he pledged to close down the prison camp in Guantanamo Bay, which has become notorious for holding detainees for years without trial. Obama promised to lose the prison within 12 months and to abolish the practice of military trials of terrorism suspects. It was an important promise. America’s reputation had been severely tarnished by revelations about the conditions at Guantanamo, by reports of waterboarding and extraordinary rendition (transporting prisoners to a third country for torture) and by the appalling treatment of detainees in Abu Ghraib prison in Iraq.

Closing Guantanamo was a redemptive gesture. Two years on, not only is the prison still in use but its future is as assured as ever. Ten days ago, the President signed an executive order reinstating the military commissions at the island prison. Human rights organisations were outraged. “With the stroke of a pen, President Obama extinguished any lingering hope that his administration would return the United States to the rule of law,” said Amnesty International while Anthony Romero, executive director of the American Civil Liberties Union, declared the President’s action to be “unlawful, unwise and un-American.”

White House spokesmen insisted the President was still committed to closing Guantanamo, which currently has 172 detainees in custody. It was Congress, they said, that had refused to sanction the transfer of the prisoners to the US mainland for trial, leaving no option but to keep the prison open in Cuba. Very little has been achieved in the quest to secure peace in the Middle East. Under Obama, US foreign policy is founded on extreme caution. At first this cool-headedness was a welcome change from the naked aggression of George W Bush and his henchmen Dick Cheney and Donald Rumsfeld.

It is also true that the President is constantly stymied by a hostile, Republican-ruled Congress. But Obama’s apparent reluctance to engage with momentous events is starting to look like more than aloofness. Some tempering of America’s role as the world’s No1 busybody may be no bad thing but under Obama the US appears to be heading towards isolationism. He is hardly doing much better at home. Economically, the US is in big trouble but the national debt is not shrinking.

Ditto the country’s ecological health; the American love affair with the car and oil remains undiminished despite any alleged commitment. But the White House appears to shy away from any tough action. The energy with which Obama entered the White House seems to have all gone in the push to bring in health care reform, which many Americans didn’t want (or still don’t realise they want).

All of which means that it is starting to look as if Obama and the Democratic Party have but one aim in mind for the rest of this presidential term: to get elected for a second. That means not doing anything that might upset any number of special interest or niche groups, which in effect means not doing very much at all. So, not too many harsh but necessary measures to tackle the financial deficit; no clear direction on where America goes with Afghanistan, even though the war there is going nowhere except from bad to worse.

The Obama government can’t even give clear direction on whether the American people are in danger of exposure to nuclear fallout from Japan following the devastating earthquake and tsunami. The US Surgeon General Regina Benjamin advised San Francisco residents to stock up on radiation antidotes, prompting a run on potassium iodide pills, while the President said experts had assured him that any harmful radiation would have receded long before reaching the Western shores of the US.

Yes we can was a noble and powerful mantra which secured for Barack Obama the leadership of the free world. Those than can, do. It is time he started doing.

Mike Walker, Colonel USMC (retired)

If only...

All,

Here is an AP quote from the President regarding a potential lock-out/strike in the NFL:

"I'm a big football fan," Obama said, "but I also think that for an industry that's making $9 billion a year in revenue, they can figure out how to divide it up in a sensible way and be true to their fans, who are the ones who obviously allow for all the money that they're making."

If only it went like this: 

"I'm a big Government fan," Obama said, "but I also think that for a government that's taking in $billions a year in tax revenue, they can figure out how to divide it up in a sensible way and be true to their taxpayers, who are the ones who obviously allow for all the money that they're taking in."

Regards,

Mike

Two Strikes for Clapper

A look at who is looking out for us... with Mike Walker, Colonel USMC (retired) 

All, 

Our Director of National Intelligence is becoming more and more unintelligible.  On 10 February 2011 he argued too long that the Muslim Brotherhood in Egypt is "largely secular."  First, we will ignore the obvious connection, as Director Clapper apparently did, that the word "Muslim" in Muslim Brotherhood stressed the importance of a sincere faith in God but instead implied some self-serving hyperbole or archaic leftover on the part of the good Egyptian brothers.

Even given that shallow excuse, how could James Clapper speak with such certain ignorance in a public hearing?  For if what Director Clapper averred is to be believed then the words "largely" and "secular" have no meaning. 

Here are a few quotes from the Muslim Brotherhood's Official English website (http://www.ikhwanweb.com/article.php?id=813): 

"Ever since the Egyptian people in is (sic) majority, along with other African and Asian peoples, embraced Islam in the deep-seated conviction that it is a true religion revealed to a true Prophet by the lord of Mankind, Islam has fully and totally arranged the life and all activities of those peoples. The two basic sources of Islam are the Glorious Qur"an and the Sunnah which is both a theoretical explanation and a practical application of the Glorious Qur"an."

Gee, is that a "largely secular" statement, Mr. Clapper?  If so, how about this quote:

"The call of the Muslim Brotherhood was based on two key pillars:

1-The introduction of the Islamic Shari`ah as the basis controlling the affairs of state and society. 
2-Work to achieve unification among the Islamic countries and states, mainly among the Arab states, and liberating them from foreign imperialism."

Still largely secular, James?  How about this:

"As for the first pillar, about 97% of the Egyptian people are Muslims, the majority of the Egyptian people are Muslims, the majority of whom perform the rites of worship enjoined by Islam. They abide by the Islamic ethics and apply to themselves to most of the rules whose enforcement does not require any government intervention or license. But legislation, the judiciary and economic and social dealings are founded on non-Islamic bases, thus creating a state of alienation between the people’s creed, on the one side, and their forms of activity which are governed by rules that contradicted their creed, on the other. The lack of any connection between the policies of the authorities in power and the legislations, on the one hand, and the Islamic Shari`ah on the other, led to the emergence of many social, economic, and political practices that are invalid under the Islamic shari`ah. It was incumbent on the Muslim Brotherhood in such a situation to adopt a system for sound Islamic education and the spreading of Islamic principles and ethics as well as the education of the Muslim individual, family, and society into commitment to Islamic ethics and principles."

Gee, that reads like a "largely secular" government is the problem and an exclusively "non-secular" form of government is the solution for the Muslim Brotherhood in Egypt.

Director Clapper needs to do more than "clarify" his words. The crisis in Egypt is of great import to the United States.  Our intelligence community, led by Director Clapper, has the responsibility to accurately present the facts to the American people.   Mr. Clapper failed miserably in that regard during his remarks to Congress on the Muslim Brotherhood. 

There is an old rule in the intelligence business; if you lose your credibility then you lose everything.  Director Clapper was profoundly wrong in a matter of urgent national importance.  "Clarifying" is disingenuous and a disservice. 

OK, so we should be easy on the good fellow, right?  No.  Perhaps you recall this previous "Clapper fiasco" as recounted during CNN's 22 December 2010 Situation Room broadcast:

"BLITZER: But if the structure of America's intelligence (inaudible) organization is at the center of the new controversy. The national director of intelligence James Clapper in an interview this week that was televised, he was asked about a terror-related arrest in Britain which had occurred 12 hours earlier. The news was all over the TV networks, but Clapper had no idea. How could that be? CNN's Brian Todd is digging deeper for us tonight. Brian? 

BRIAN TODD, CNN CORRESPONDENT: Wolf, this is being called a simple glitch by Clapper's staff and not reflective of his work as DNI, but that glitch led the man who leads 16 intelligence agencies to be very embarrassed in front of network TV cameras. 

(BEGIN VIDEOTAPE)

TODD: If you were watching CNN or any other news network on Monday, you may have known about this -- the arrests of 12 men in Britain allegedly plotting a terror attack. You may have known about it, but on Monday afternoon, several hours after the arrests, the U.S. director of national intelligence did not know when asked during an ABC interview. 

DIANE SAWYER, ABC NEWS: London -- how serious is it? Any implication that it was coming here, any of the things that they have seen were coming here? Director Clapper? 

BRENNAN: The arrests of the 12 by the British this morning... 

(CROSSTALK)

BRENNAN: And this is something that the British informed us about early this morning. 

TODD: White House counterterrorism adviser John Brennan quickly jumped in, but ABC's Diane Sawyer later came back to Clapper, who oversees 16 intelligence agencies. 

SAWYER: I was a little surprised you didn't know about London, Director Clapper. 

JAMES CLAPPER, DIRECTOR OF NATIONAL INTELLIGENCE: Well, I'm sorry. I didn't. 

TODD: The DNI's office called Sawyer's first question confusing and ambiguous. Brennan said before that interview, Clapper had been working on developments on the Korean peninsula and the START treaty.

BRENNAN: Should he have been briefed by his staff on those arrests? Yes. And I know there was breathless attention by the media about these arrests, and it was constantly on the news networks. I'm glad that Jim Clapper is not sitting in front of the TV 24 hours a day and monitoring what comes out of the media. 

TODD (on camera): What do you make of that comment? Backspin?

OK, here's where we are at, Clapper Strike 1 is dismissed as a "glitch."

Clapper Strike 2 is dismissed as just needing "clarification."

Are we going to wait around until Strike 3 before we realize the wrong guy is in the job?

Right now, I have more faith in the "clapper light switch" than DNI James Clapper. The sales pitch "clap on-clap off" is somewhat credible while Director of National Intelligence James Clapper is not.  He seems to be operating more on a mindset of "wishful thinking" than an analysis of  the cold hard facts.  That is the path to disaster.

Semper Fi,

Mike

Helen Whalen-Cohen's piece "Say What?"from Town hall…

It's like something out of "1984."

In George Orwell's dystopia, "thought police" monitored citizens to make sure that they didn't disparage The Party. In today's world, college students all over the country face restrictions on speech in the form of "speech codes." These dicta include harassment policies, "free speech zones," "tolerance" policies and outright bans on "hate speech." The aim of these policies is noble -- to prevent discord and foster respect on campus -- but in the culture of political correctness run amok, such proscriptions often eclipse students' rights to express themselves freely.

Speech codes are regulations prohibiting speech that is otherwise protected by the First Amendment. They are prevalent -- and pernicious -- on college campuses.

How are student bodies affected by this wave of political correctness? Is it helping campuses maintain civility or causing deeper harm?

Speech restrictions no longer have to be issued from on high. After being immersed in a culture that values political correctness over First Amendment rights for long enough, students are learning to censor each other with two words: "I'm offended."

Greg Lukianoff calls it "unlearning liberty." As the president of FIRE, he has watched students trend away from discussion and towards policing one another. In an interview with the website Spiked, he points out that students are learning to let offense trump discussion, ending conversation: "There's a very predictable result, which is that if you allow the ultimate trump card against free speech to be a claim that 選'm offended,' then people learn very quickly to say they are offended." As Lukianoff notes, students learn to call on campus administration to quiet voices that they would rather not hear. What role will they expect the government to play in their lives after graduation?

Indeed, many students advocate speech codes today, a product of learning that they have a right not to be offended and that that right can be violated by someone else's thoughts. Campus policies such as "Stop Bias" are adding fuel to the fire. It asks students to find and report instances of bias anonymously (including bias surrounding "actual or perceived" marital status). The school's website even encourages students to report political differences as a form of bias, saying that Barack Obama or Sarah Palin can be listed as the "victims." This is not an example from Stalinist Russia, but Syracuse University. Such programs are ostensibly meant to create a safe space for discussion. But will encouraging students to police each other accomplish that goal?

Programs like these teach that the right response to offense is not debate, but censorship, and that it is appropriate to turn to university administrators to remedy the supposed harm. Sticks and stones may break my bones, but words can never hurt me -- until I get to college.

Oh California...

Contributed by Mike Walker, USMC Colonel (retired)

All,

1. California is not broke.  The government in Sacramento is broke.  That is a huge distinction.  The average California Joe's and Jane's will go to work, pay their taxes, buy dinners, pay the rent, and get on with life in a pretty nice place to live.  The US and California economies will NOT tank if the dysfunctional Sacramento government goes through an ugly fiscal meltdown.

2. Sacramento is more broken than broke.  In the worst case scenario, the State government will not cease to exist.  California's government will still take in, on average, well over $1,000,000,000.00 per WEEK.  Put another way, it currently collects in the neighborhood of $200 million a day, seven days week, 52 weeks a year on average, even during a deep recession.

So, again, the US and California economies will NOT tank if the dysfunctional Sacramento government runs out of cash momentarily.  It will be embarrassing, ugly, and painful for some but not the end of the world. 

Why is this happening? The reason why California's government is always on the verge of going broke, in good times and in bad, is that it is unable to stop spending above and beyond the average +$1 billion it takes in every week.

3. THE worst thing that can happen is for the US taxpayer to bailout California's government.  Most of you may not know this but the California state budget (1 July 2010-30 June 2011) passed in October 2010 already has included a Federal bailout.  No kidding.

The elected officials in Sacramento already voted in a $5 billion Washington D.C. bailout (that does not exist) in order to try (in vain) to balance the government of California’s budget.  That deserves the gold ribbon for chutzpah.

A good thing that could happen is for the US government to give California's government an emergency LOAN but only if Uncle Sam requires Sacramento to abide by the same kind of emergency loan rules that Sacramento imposes on, say, a bankrupt public school district.  

Uncle Sam must require the California government to create a balanced multi-year projection (MYP) of its budget for the current and two subsequent fiscal years in order to receive the loan.  Uncle Sam should further require the California government to create a fiscal action plan (FAP) to permanently solve the budget disconnect between revenues and expenditures.  Uncle Sam should not release the bulk of the loan until both the MYP and FAP are enacted to the satisfaction of Uncle Sam.   

Uncle Sam needs to appoint a Federal Fiscal Advisor who will go to Sacramento with power to approve or disapprove California State government expenditures.  The Federal Fiscal Advisor should remain in place until such time that the California government pays back the loan. If California's elected officials refuse then let them live on their $200M a day and be done with it.

Warm regards from sunny California,

Mike