Geithner doubtful on aid

This business about California being too big to fail is not getting much traction on Capitol Hill - or the Treasury Department for that matter. Treasury Secretary Timothy Geithner said he didn't think he had the authority, absent congressional legislation, to aid the state under the program set up by Congress to help rescue banks. And lots of luck getting lawmakers from other states to sign off on bailing out California. The bigger question is whether the slash-and-burn approach now envisioned by the governor and legislature, will translate into the kind of misery that can be easily quantified. For anyone to take real notice, California not only has to be in bad shape, it has to look the part. Meantime, the Obama folks are being put into another tough spot. From the LAT:

On one hand, California's economic health is critical to President Obama's efforts to turn around the national economy. And in a state as politically important as California, the last thing the president wants is a headline like the one that followed President Ford's refusal to help New York City out of its fiscal morass in the 1970s: "Ford to City: Drop Dead." On the other hand, any extraordinary rescue of California could open the flood gates of the Treasury to similar requests by cities, counties and states throughout the country and exacerbate an already massive federal budget deficit.