Now that we are accustomed to government bailouts of every stripe — from banks to carmakers — the question is actually being asked with a straight face: Is California too big to fail?

This is, as we have seen, another way of asking: Should California get a bailout?

Our quick, firm answer: No.

Clearly, the Golden State is golden no longer. California is a monstrous state with monstrous budget problems.

Its budget shortfall, about $26 billion, is about four times the size of Maine’s entire annual budget.

The state’s economy makes up about 13 percent of the nation’s gross domestic product.

California, if it were a separate nation, would have the 7th or 8th largest economy in the world, about the size of France or Spain.

But, nationally, there is little sympathy for what some derisively call the land of fruits and nuts.

And with good reason.

Yes, California’s state budget has been hit by the same economic forces that have racked all of the nation’s states. It has been especially hard hit by the mortgage crisis, home foreclosures and bank failures.

But, what’s happening in California really has less to do with economics than politics.

The state has been edging toward this precipice for more than 30 years, ever since Howard Jarvis and Proposition 13.

If you are too young to remember, Jarvis was an elderly tax-cutting crusader who championed what was seen in 1978 as a radical solution.

His idea, eventually enshrined by referendum in state law, placed a 1 percent cap on property taxes and required a two-thirds majority of the Legislature to raise taxes and approve state budgets.

The goal was to slow the growth of state government.

And it worked. California used to rank fifth in the nation in per pupil spending, and it now ranks 47th. California used to have highway and university systems that were the envy of the world.

No more.

Still, it hasn’t been enough.

Additional deep cuts are needed. The Los Angeles Unified School District alone is scheduled to lay off 2,500 teachers. Gov. Arnold Schwarzenegger is proposing radical steps, like cutting day care for the elderly and paying the state’s bills with IOUs.
The state could raise taxes, but a minority of legislators stands in the way. The state could cut spending, but a majority of legislators is opposed to further cuts.

If politics is the art of compromise, California’s Legislature and government have lost the art.

A government bailout might delay the day of reckoning, but it won’t solve the political problems at the root of this crisis.
California, like all states, must either bite the bullet and raise taxes or swallow its pride and slash services.

These are the same choices faced by every family, every business, every city and every state when revenues don’t match expenses.

Size doesn’t exempt California from the reality of hard choices.


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