Will Obama Use Stimulus Funds to Pummel California into Submission?

By John W. Lillpop

The world's seventh largest economy, that of the state of California, is on a fast track to insolvency, a situation that may be significantly expedited if the Obama administration follows through on a threat to cutoff stimulus funds.

At issue is a budget decision made by California's government that will save the state $74 million, but which apparently does not meet the Obama smell test for running state government.

As reported in the LA Times, in part:


"Reporting from Sacramento -- The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget.

"Schwarzenegger's office was advised this week by federal health officials that the wage reduction, which will save California $74 million, violates provisions of the American Recovery and Reinvestment Act. Failure to revoke the scheduled wage cut before it takes effect July 1 could cost California $6.8 billion in stimulus money, according to state officials.

"The news comes as state lawmakers are already facing a severe cash crisis, with the state at risk of running out of money in July.

"The wages at issue involve workers who care for some 440,000 low-income disabled and elderly Californians. The workers, who collectively contribute millions of dollars in dues each month to the influential Service Employees International Union and the United Domestic Workers, will see the state's contribution to their wages cut from a maximum of $12.10 per hour to a maximum of $10.10. "

Once again, Barack Obama is attempting to exploit a financial crisis in order to expand the reach of the federal government, while carrying water for labor unions.

In this case, the issue is best left to state and local authorities.

What next, Mr. President?

Wait for the state to collapse into insolvency and then nationalize it as though it were a wonky private enterprise like General Motors or a destitute bank?

A word of caution for Gov. Arnold Schwarzenegger: Watch your backside governor, or you may find yourself in the same boat as Rick Wagoner, deposed CEO of GM!