SAN FRANCISCO (Reuters) - California's struggle to fund its budget deficit faced fresh problems on Thursday, after U.S. Treasury Secretary Geithner refused to use bank bailout money to help state finances, and the state's fiscal watchdog objected to a plan to sell warrants to raise cash.
Early Thursday, U.S. Treasury Secretary Timothy Geithner during testimony before a House of Representatives Appropriations subcommittee, said the Treasury was not able to tap the $700 billion Troubled Asset Relief Program for bank bailouts to help California.
California State Treasurer Bill Lockyer had earlier this month urged the U.S. Treasury to extend guarantees for short-term debt to financially strapped states and local governments facing declining revenues.
"We do not believe that (the fund) as currently legislated provides a viable solution to this specific challenge," Geithner said, adding that Treasury was not legally able to guarantee new debt issues.
[ZD: The U.S. wants to make sure all the bailout money goes to the corporate executives who caused the problem. If it were to be used to provide State functions and services, that would use up money for the corporate executives.]
California faces thousands of job cuts and deep spending cuts to state health, education and other services as the nationwide economic slump has reduced tax revenues.
[Good! That will keep everyone fighting it out on the street level over a loaf of bread and bottle of water while the higher up make sure all the money stays on top as they shut off the "trickle down" valve.]
"The public is under the delusion that they can have everything -- potholes filled, new freeways, a good education system -- but they aren't willing to pay for it ... A lot of critical services are going to be cut and there will be serious consequences," said Jim Hawley of the Elfenworks Center for the Study of Fiduciary Capitalism.
[How dare he suggest we can't have everything! Is he against potholes being filled? Doesn't he know we need new freeways? And critical services cannot be cut, either. Someone on our Neighborhood Council is a mom who's daughter's soccer team needs new uniforms, so we paid for them out of city money, because it was the compassionate thing to do. Plus, remember, we need a magic bullet train to connect San Fransico with Los Angeles. THEN, everything would be fine. And we must remember everything else!]