S&P forces Democrats to balance budget

June 13, 2012

By Katy Grimes

This morning Assembly Speaker John Perez, D-Los Angeles, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, anounced big solutions for the state’s budget problems. They said the Senate and Assembly budget proposals, due on Friday, will close the deficit this year, erase $200 billion in debt, create a structural balanced budget and provide the state with $2 billion in reserves by the 2015-16 budget year.

Steinberg and Perez told reporters that, because they stand for the middle class and the poor, they’ve made tough choices, and it’s time that California ended its chronic budget problems.

And they are going to perform all of this budget magic without any additional borrowing.

Miracle of all miracles–California will be in the black by the end of the 2011-12 budget year, which ends on June 30, apparently just because it’s the right thing to do.

Ahem…not so fast.

After years of record deficit spending, why did Steinberg and Perez pick now to pass a balanced budget? Why would the state start disciplining itself now?

I always look at motive when I am seeking answers.

The answer

Standard & Poor’s is threatening to downgrade California’s outlook if lawmakers don’t balance the budget without gimmicks. “We are  being disciplined by our lenders who will downgrade us for fudging,” said Assemblywoman Diane Harkey, R-Dana Point.

Bad old  Wall Street bankers are forcing California to clean up its financial mess in order to prevent a catastrophic economic tsunami.

California’s economy is nearly one-eighth of the entire country’s gross domestic product. It totals 30 percent of the debt carried by all 50 states, according to Gabriel Petek, an S&P analyst. Petek, interviewed by FOX Business, said that California is overly reliant  on personal income taxes, and that the state’s tax structure is behind the deficit because of this reliance.

In 2009, the Legislature voted to allow the state to pay up to 12 percent on short-term variable borrowing,  instead of the 5 percent the state had been paying.

“This is junk bond debt,” said Harkey, who fought against the debt authoriztion bill, SB 116, by state Sen. Ron Calderon, D-Montebello.

California needs a $1.8 billion cash flow in short term borrowing this July, but S&P is requiring the money to be repaid by the end of the budget year.

Steinberg and Perez said that they don’t want to fight with Brown, but are prepared to. They plan to bring a vote on the budget Friday.

“You don’t need to cut deeper when you have a structural balance in one to two years,” Steinberg said. “Cuts are a necessity, but not a virtue.”

33 comments

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  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 13 June, 2012, 14:40

    Steinberg and Perez told reporters that, because they stand for the middle class and the poor

    Laughable.

    These two have destroyed the poor and middle class with billions in regressive taxes, to fund their buddies the public unions.

    Reply this comment
  2. doug
    doug 13 June, 2012, 15:17

    i think they’re doing something “drastic” now that they will not get paid if they don’t approve a budget. we’re getting them in their wallets.

    i remember last year some assemblyman cried he wasnt going to make his mortgage payment since the whole budget was stuck.

    Reply this comment
  3. Dyspeptic
    Dyspeptic 13 June, 2012, 17:30

    None of this adds up. How can they achieve a structurally balanced budget in 1 or 2 years without either massive tax increases, deep spending cuts or a booming economy? The current budget deficit is $16 billion and that doesn’t include the $8.5 billion Jerryatric Clown expects to get from his probably D.O.A. tax hike initiatives. I smell smoke and mirrors on this one. Perez and Steinberg wouldn’t do the right thing if you put a gun to their pointy noggins.

    Maybe they have worked out some nefarious scheme with S&P. Remember back in February when the same S&P analyst mentioned in this article suddenly upgraded the states credit outlook? That was a real head scratcher at the time. The ratings agencies can’t be trusted anymore, they are part and parcel of the crony capitalist system. Remember all the solid credit ratings that Lehman Bros., AIG and Wachovia Bank got from the likes of S&P right up until they went bankrupt? I smell back room deals on this one.

    Reply this comment
  4. Gorbo the Clown State Worker
    Gorbo the Clown State Worker 13 June, 2012, 18:17

    Jerryatric Clown expects to get from his probably D.O.A. tax hike initiatives. I smell smoke and mirrors on this one. Perez and Steinberg wouldn’t do the right thing if you put a gun to their pointy noggins. LOVE THIS COMMENT

    Reply this comment
  5. Ted Steele, The Decider
    Ted Steele, The Decider 14 June, 2012, 06:47

    Got news for you partisans— the temp tax increase will pass—- thank God for the bay area!

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 08:05

    LOL…another infamous wrong prediction.

    I love it when the trough feeder makes predictions, it bvindicates me the second it happens 😉

    Pension taxes= DOA

    Reply this comment
  7. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 08:06

    And you can take that to the bank.

    Reply this comment
  8. The Ted Steele Legal System (tm)
    The Ted Steele Legal System (tm) 14 June, 2012, 08:46

    lol ™ mmmmmmmmmmmmmmm we’ll see little buddy !

    Reply this comment
  9. Ulysses Uhaul
    Ulysses Uhaul 14 June, 2012, 09:58

    Time to PACK AND SHIP!

    Reply this comment
  10. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 10:21

    $100 troughie, put up or shut up™ 🙂

    Reply this comment
  11. The Ted Steele Legal System (tm)
    The Ted Steele Legal System (tm) 14 June, 2012, 11:15

    A $100 troughie? What’s that?

    Reply this comment
  12. The Ted Steele Legal System (tm)
    The Ted Steele Legal System (tm) 14 June, 2012, 11:16

    Mr. Uhaul— You may be right !!~

    Reply this comment
  13. Ulysses Uhaul
    Ulysses Uhaul 14 June, 2012, 12:42

    Teddy my man….Wonder is unhappy for some reason…..we’re happy that’s all that counts! Pass the food stamps.

    Reply this comment
  14. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 14:09

    $100= my bet

    Troughie™ = Teddy Steal 🙂 put up or shut up™

    Reply this comment
  15. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 14:10

    Teddy my man….Wonder is unhappy for some reason…..we’re happy that’s all that counts! Pass the food stamps.

    The POOR and MIDDLE CLASS should not be paying the freight for $10 million retire at age 50 pensions for GED educated government employees, if that is “unhappy” then I fit the definition 🙂

    Reply this comment
  16. Ulysses Uhaul
    Ulysses Uhaul 14 June, 2012, 14:57

    Good Wonder.

    Getting frustrations and aggression out through deep personal writings is great therapy.

    Reply this comment
  17. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 15:16

    Then Teddy is getting some great therapy!

    Reply this comment
  18. The Ted Steele Legal System (tm)
    The Ted Steele Legal System (tm) 14 June, 2012, 15:23

    Poodleboi— I have been living in your tiny head for so long I need to pay you rent! ™

    Type now slave troll !!!

    Reply this comment
  19. Senor Mgr
    Senor Mgr 14 June, 2012, 15:30

    “Thank god for the bay area???” That is the same as saying thank god for Molokai, one and the same. Molokai was a leper colony, the bay area is a colony of arrogant left wing elitists, violent homeless, eco-obstructionaists, and dumb assed pedestrians, not to mentioned the self riteous arrogant bike riders. There are a few normal people in the bay area but not many. Unfortunately all state level offices are filled with bay area trash, explains alot about the condition of our state!!

    Reply this comment
  20. Ulysses Uhaul
    Ulysses Uhaul 14 June, 2012, 16:18

    Whew..got it all out….you gotta feel better!

    Reply this comment
  21. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 17:27

    I think Teddy Steals should pay Rex tuition for all the schooling Rex gives teddy 😉

    Reply this comment
  22. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 17:27

    $100 talks™, your empty talk walks 😉

    Reply this comment
  23. Ted Steele, The Decider
    Ted Steele, The Decider 14 June, 2012, 19:16

    mmmmmmmm Little poodle boi….mmmmmm i see i am still living in your tiny head ….mmmmm nite

    lol ™

    Reply this comment
  24. Ted Steele, The Decider
    Ted Steele, The Decider 14 June, 2012, 19:29

    OK– here’s whats wrong with my dem. party in California—-

    http://totalbuzz.ocregister.com/2012/06/14/gop-not-dems-back-gov-brown-for-once/86524/

    Ted– Fair and balanced— you decide !!

    Reply this comment
  25. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 June, 2012, 23:58

    Pay up punk™ 😉

    Reply this comment
  26. Ken
    Ken 15 June, 2012, 04:05

    Budget matters seem to be beyond the capacity of our elected loonies in Sacto. State officials are clueless about and espouse full blown legerdemain when it comes to the budget, but they are certifiable experts when it comes to using smoke and mirrors to explain state finances. These guys are going to conjur up $200BN from this air after not having a clue on the budget for a couple decades? Not a chance. It’s a pathetic song and dance routine and it has rouined the state in so many ways.

    Reply this comment
  27. Ulysses Uhaul
    Ulysses Uhaul 15 June, 2012, 07:41

    Until voters trust the authors of Prop 187 again….voters will side with the party for the common man.

    Reply this comment
  28. Rex the Wonder Dog!
    Rex the Wonder Dog! 15 June, 2012, 08:12

    Dems are the party of the common trough feeder™ 🙂

    Reply this comment
  29. Ulysses Uhaul
    Ulysses Uhaul 15 June, 2012, 09:29

    Wonder. Be positive even if your rich guys are never in power…we redistribute for the hundreds of years the rich guys paid slave wages to immigrants and minorities. Just leveling the playing field giving everyone a fair shot.

    Reply this comment
  30. Rex the Wonder Dog!
    Rex the Wonder Dog! 15 June, 2012, 11:33

    Single BAM!!!!!!!!!!!! 🙂

    Reply this comment
  31. The Ted Steele Legal System (tm)
    The Ted Steele Legal System (tm) 15 June, 2012, 13:12

    Oh UHaul— you’re cracking me up man !!

    Reply this comment
  32. Rex the Wonder Dog!
    Rex the Wonder Dog! 15 June, 2012, 15:48

    Me too BAM 🙂

    Reply this comment

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