Here’s another bit of chilling news from the financial follies: Last week, Governor Arnold Schwarzenegger of California warned that the Golden State may ask the feds for an emergency loan of $7 billion. Sacramento has been unable to borrow the money it needs because of the global credit crunch. Think about the implications, and let your thoughts wander back to the 1970s, when New York City was cut off from credit because of reckless spending and borrowing. California is the world’s eighth-largest economy. Its resources make the Empire State look puny indeed. If Sacramento is in such trouble, can Albany be far behind?
Governor David Paterson is trying to rouse state lawmakers from their slumber, insisting that the Legislature face up to the grim task of cutting spending in an election year. Legislators would much prefer to fund all kinds of local projects in anticipation of voters’ gratitude in November. When Mr. Paterson met with legislative leaders last week, he told them that they’ll need to cut $2 billion—on top of the $427 million they reluctantly cut in August—from this year’s budget. The leaders took exception to Mr. Paterson’s sense of urgency. They believe that his remedies are just a little too hasty; it’s not as though the economy is in free fall, right?
The majority leader of the Republican-controlled Senate, Dean Skelos of Long Island, objected when the governor hinted he didn’t think legislators understood the gravity of the moment. “I’m not in college,” Mr. Skelos said. “I’m not in law school anymore. I don’t need to be lectured.” Mr. Skelos has a bachelor’s degree in history; presumably, then, he knows what happened to the United States in the early 1930s.
Mr. Skelos, to his credit, warned against ill-considered tax hikes. Mr. Paterson is similarly disinclined to raise taxes at a time when New Yorkers are suffering. That’s common sense. But the governor is correct to note that if tax hikes are ruled out, the state has no choice but to cut spending. And when the governor talks about massive spending cuts, most legislators interpret that to mean cuts in school spending. It would be scandalous indeed to balance the budget on the backs of schoolchildren. That said, the educational bureaucracy is thick indeed. School districts are filled with patronage hires (which, by the way, is why legislators so earnestly protect them).
Mr. Paterson is trying to get control of Albany before things spin out of control. By doing so, he is showing the kind of leadership required in a genuine emergency. The governor of California may be a movie star, but he cannot compare to David Paterson for candor and skill in fiscal management.