California's Fiscal Woes a Microcosm of Our Culture of Greed.

So, the people of the Republic of California have spoken. On Tuesday of this week, they failed to pass five of six "reform" propositions that were intended to help the state out of the huge fiscal deficit that they find themselves in. Just in case you weren't paying attention, here's a very brief summary of each proposition:

• Prop 1A (Failed): Rainy Day fund. This proposition would have placed limits on gov't spending during boom times to increase rainy-day reserves to be used during major natural disasters or economic down times.
• Prop 1B (Failed): Education Funding. Contingent on Prop 1A passing. Annual supplemental payments for K-12 schools and community colleges to begin in 2011 to make up for recent cuts.
• Prop 1C (Failed): Lottery Modernization. Authorizes state officials to borrow five billion dollars to be repaid by profits from a revamped California State Lottery.
• Prop 1D (Failed): Special Education Reallocation. Authorizes the state to shift 1.7 billion dollars from the early childhood development programs over five years to help balance the state budget.
• Prop 1E (Failed): Mental Health Budget. Authorizes state officials to ship money away from a mental health program established by voters in 2004 in an effort to help balance the state's books.
• Prop 1F (Passed): Elected Official Salaries. Would prevent pay raises for legislators and statewide officeholders during deficit years.

California's electorate may finally be waking up from decades of nightmarish propositions that have continued to increase government benefits while failing to address how those programs would be funded or maintained. As the Govinator put it, the people of California have now told them to "go all out and make those cuts and live within your means". I doubt that Californians really understand how much pain that is going to cause.

In 1978, Californians approved Proposition 13, officially titled the "People's Initiative to Limit Property Taxation". This resulted in a cap on property tax rates and an immediate collective reduction of about 57%. The intent was to prevent older state citizens from being taxed right out of their homes as property values continued to spiral out of sight. This proposition is a metaphorical and political 'third rail'. To touch it is to commit political suicide. And yet, with this legislation in place, it is almost impossible for California to raise the needed revenues for all of the programs that it's citizens have demanded through countless idiotic "propositions'. Even a "reform" candidate like Governor Arnold Schwarzenegger, who was advised by mega-investor Warren Buffet to repeal this act, has been powerless to do anything about it.

Much of the United States is in the same lamentable boat. We want less taxation, but we want the government to give us more benefits, not less. Yet anybody who knows how to balance a checkbook understands that if you continue to make the income each month while spending a little more each month that you will eventually come to a point where what you spend is greater than what you bring in. At that point, you must borrow to make up the difference or you must cut spending.

It's not like we haven't seen this coming. We've been talking heads on the alphabet broadcasters and 24 hour news channels proclaiming the future insolvency of Social Security, Medicare and Medicaid for decades. But we have become jaded by the frequency of the message and the remoteness of the actual eventuality.

Well, it's not remote anymore. The United States of America, once the leading market as well as military superpower in the world, is about to have it's AAA rating by Moody's revoked. Sixty billion of California's enormous debt is at "junk" status. The American people, led by their failure to recognize the financial disaster looming before us like the iceberg ahead of the speeding Titanic, and captained by Presidents and Congressmen who have failed to take the necessary hard and unpopular steps to correct the course of our doomed ship of state are about to be tossed into the icy seas of state and federal bankruptcies.

All because we were unable to balance our checkbook.