IOUs in California - the Start of Something Good

The California Legislature can't figure out what to do when the money runs out.

With a day to go until a cash crisis would force the state to stop paying its bills, lawmakers and Gov. Arnold Schwarzenegger worked into the night Tuesday but failed to reach a budget agreement.

The state comptroller knows what to do, however.

Chiang, who acts as the state's banker, has scheduled a meeting for Thursday morning of a state board that will determine what interest rate the state will pay on the $3 billion a month in IOUs it will begin issuing to contractors and some of California's neediest citizens, including the elderly, the disabled and the poor.

So do the banks.

So far, no banks have formally committed to honoring the IOUs, said Chiang's spokeswoman, Hallye Jordan.

Is this a good thing? When the government's promises of cradle-to-grave security for all turn out to be fantasies, doesn't that lead to more self-reliance? Isn't that a good thing?

As an aside, note that this is not a failure of the legislative process so much as it is progressive social spending having a head-on collision with reality. You don't get something because you want it or even need it. You get something because you (or someone else) earned it. No earnings means no monies!