California Gov. Jerry Brown has embraced austerity as the solution to the state’s economic problems, and his updated budget plan contains plenty of pain for most everyone as it cuts deeply into social programs. —ARK
Welfare payments, healthcare for the poor, and benefits for elderly and disabled Californians will be immediately slashed by around $8.3bn (£5.2bn), which equates to roughly 17 per cent of Mr Brown’s entire discretionary budget. And state offices, which employ roughly 200,000 people, will switch to a four-day, 38-hour work week.
The radical proposals came days after it emerged that the Golden State, which is currently suffering 11 per cent unemployment, has a projected annual deficit of $16bn, far higher than the $9bn predicted in January. Its total debt is now around $40bn, giving it the lowest credit rating of any US state in recent history and prompting fears of a Greek-style default crisis.
… This year, even with Mr Brown’s latest round of cuts, the state will spend roughly $91bn but only raise $83bn. If allowed to continue, it could find itself unable even to service existing debts in a matter of months. “California has been living beyond its means,” Mr Brown said. “The USA and its federal government is living beyond its means. Well, there has to be a balance and a day of reckoning.”
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