Oh my: No bailout for California, says White House

Not yet, anyway. I’m surprised, but only because the thought of The One declining a request for free taxpayer money seems unfathomable, like Santa telling a kid he really is getting coal in his stocking this year. Santa doesn’t do that.

Of course, Santa doesn’t have to run for reelection either. Given that voters nationally oppose a California bailout by a margin of 35 points and that California’s likely to stay blue in 2012 no matter what happens, this is actually a no-brainer.

Axelrod indicated that federal intervention on California’s behalf would set a dangerous precedent.

“There’s no doubt that there are states all over this country who have problems — not problems the size of California — but significant problems. And every governor in the country wants and needs assistance,” he said…

Even if the president were to make an exception for California, the aid would need to come on unattractive terms so as not to send a message that distressed states can expect Washington to engineer a painless rescue.

Although the $700-billion federal bailout fund potentially could be tapped to help California, Treasury Secretary Timothy Geithner expressed doubt Thursday that he had the authority, without new congressional legislation, to aid California under the program originally set up by Congress to rescue financial institutions…

California Democrats are working to build a case for federal intervention, noting the state’s importance to President Obama’s efforts to turn the economy around.

“Allowing California to go belly up presents a great risk to our hoped-for continued economic recovery,” Rep. Adam Schiff (D-Burbank) told Geithner.

How strange that Team Barry would suddenly become sticklers about TARP’s proper purpose and cavalier about the systemic effects of letting a huge entity fail. They were happy to ignore the former and fret about the latter when it came to rescuing GM, which is now set for $30 billion more in, ahem, “loans” as part of its imminent bankruptcy. In any case, as I emphasized, there’ll be no bailout yet, but once the economy recovers a bit and Obama has some new political capital to spend, all bets are off. George Will eyes the game plan in California:

The Obama administration, which rewarded the United Auto Workers by giving it considerable control over two companies it helped reduce to commercial rubble, will serve the interests of California’s unionized public employees and others largely responsible for reducing the state to mendicancy.

These factions will flourish if the state becomes a federal poodle on a short leash held by the president. He might make aid conditional on the state doing things that California Democrats and their union allies would love to be “compelled” to do: eliminate the requirements of two-thirds majorities of both houses of the legislature to raise taxes and pass budgets, and repeal Proposition 13, which voters passed in 1978 to limit property taxes. These changes would enable the legislature (job approval rating: 14 percent) to siphon away an ever-larger share of taxpayers’ wealth and transfer it to public employees. Such as prison guards, whose potent union is one reason California’s cost-per-inmate (about $49,000) is twice the national average.

Per the LA Times piece, Barney Frank’s already talking about passing legislation to let Treasury tap TARP to aid ailing states. If you missed Reason TV’s video the other day about the coming California-ization of America under Obama, now might be a good time to catch up.