[Congressional Record (Bound Edition), Volume 155 (2009), Part 11]
[House]
[Pages 14865-14866]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       TOUGH LOVE FOR CALIFORNIA

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. McClintock) is recognized for 5 minutes.
  Mr. McCLINTOCK. Mr. Speaker, the Governor of my home State of 
California has called for the Federal Government to underwrite as much 
as $15 billion of revenue anticipation notes that the State has to 
issue to avoid bankruptcy. I think that would be a colossal mistake. 
Such an act would not only put at risk billions of dollars that our 
country cannot afford, it would actually make California's fiscal 
condition worse.
  Today, California faces a paradox. Despite record levels of spending 
and record levels of borrowing, it can no longer produce a decent road 
system or educate its kids or lock up its prisoners. Those who blame 
the recession for California's budget crisis profoundly misunderstand 
the nature of that crisis.
  Even before California's revenue began to shrink, the State 
government was running a chronic $10 billion deficit and piling up 
unprecedented debt. The recession was merely the catalyst. The 
underlying cause is rampant mismanagement of the State's resources.
  California spends about $43,000 to house a prisoner per year, while 
many States spend just half of that. California spends over $11,000 per 
pupil, but only a fraction of that ever reaches the classroom. 
California has one of the most expensive welfare systems in the 
country, and yet one of the worst records in moving people off of 
welfare.
  That has never seemed to bother California's legislature or its 
Governor. They are like the shopkeeper who leased out too much space, 
ordered too much inventory, hired too many people and paid them too 
much. Every moment that shopkeeper covers his shortfalls with borrowing 
and bookkeeping tricks.
  Ultimately he is going to reach a tipping point, where anything he 
does makes the situation worse. Borrowing costs are eating him alive 
and he is running out of credit. Raising prices causes his sales to 
decline and there is only so much discretionary spending that he can 
cut.
  That is California's predicament in a nutshell. California's 
borrowing costs now exceed the budget of the entire University of 
California, and the reason for their loan guarantees is their credit is 
exhausted. They have just imposed the biggest tax increase by any State 
in American history, and it has actually reduced their revenues and 
made the budget gap wider.
  Although there are many obsolete, duplicative or low-priority 
programs and expenditures that the State can and should abolish, there 
aren't enough of them to come anywhere close to closing California's 
deficit without directly impacting basic services.
  Sadly, California has reached the terminal stage of a bureaucratic 
state, where government has become so large and so tangled that it can 
no longer perform even basic functions, a warning to all of us here in 
this House, I might add. Simply stated, there is now no substitute for 
a fundamental restructuring of the State's major service delivery 
systems and restoring the efficiencies that once produced a far higher 
level of service at far lower costs than what we see today.

[[Page 14866]]

  Now, restoring that efficiency is going to require the Governor and 
the legislature to wrest control from the public employee unions, to 
dismantle the enormous bureaucracies that have grown up over the 
service delivery system, and to decentralize administration and 
decisionmaking, to contract out services that the private sector can 
provide more efficiently, to rescind the recent tax increases that are 
actually costing the State money, and to roll back the regulatory 
obstacles to productive enterprise.
  These are the changes that cannot be implemented overnight and that 
will not begin to produce results for some time, and that brings us to 
the fine point of the matter. What Churchill called history's 
``chilling words'' are about to be pronounced on California's failed 
leadership: Too late.
  The Federal loan guarantee or bailout may be the only way to buy time 
for the restructuring of California's bureaucracies to take effect, but 
the discussion remains academic until and unless the State actually 
adopts the replacement structures, actually unburdens its shrinking 
productive sector and presents a credible plan to redeem the State's 
crushing debt and looming obligations. Without these actions, Federal 
intervention will only make California's problems worse by postponing 
reform, continuing unsustainable spending and piling up still more debt 
that the State cannot redeem.
  In short, if California won't help itself, the Federal Government 
cannot and it should not and it must not.

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