Courthouse News – California won’t accept its own IOUs for payment:
SAN FRANCISCO (CN) – Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors’ federal class action claims the state is trying to balance its budget on their backs.
Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California “paid” her with an IOU that two banks refused to accept – yet she had to pay California sales tax on the so-called “sale” of the uniforms.
I was telling someone the other day to imagine working for a company that was in as bad a shape as California.
- Imagine your company furloughed all of its employees several days a month to reduce costs.
- Imagine their already-underfinanced pension fund made bad investments that resulted in losses of 25% of the pension fund’s assets.
- Imagine the company’s bonds are classified as “junk” with a rating as low as Russia’s.
- Imagine that in July your company took in $4.4 billion and spent $9.4 billion.
- Imagine they couldn’t pay their bills in cash and had to issue IOUs.
- Imagine that your company couldn’t balance its budget even if it fired all of its employees.
- Imagine that despite its dire financial predicament your company refused to drill for oil off its coastal property because it was still more concerned about environmental problems than financial problems.
It’s obvious that any company that had problems like California’s couldn’t stay in business. Anyone who thinks a government can be run that way is delusional.
Things are going to end badly in California. What happens in California is going to provide a glimpse of the problems the United States is going to have due to excessive spending, debt, and poorly-funded retirement programs.