COMPARISONS between California and the land of Socrates have become frequent recently. They are different, of course. California is nowhere near defaulting on its debts (though rating agencies consider that risk greater in California than in the other 49 states). But California has become America’s symbol of fiscal mismanagement as Greece is now Europe’s.
Arnold Schwarzenegger, California’s lame-duck governor, conceded as much on May 14th, when he updated his budget proposal to the legislature. After several rounds of painful spending cuts, California is now contemplating a budget that is, when adjusted for inflation and population growth, smaller than it was a decade ago. And yet the state still confronts a budget hole estimated at $17.9 billion in the current and coming fiscal years. Mr Schwarzenegger, a Republican in a high-tax state, wants to plug that hole without raising taxes, with more cuts and some federal aid.