November 6, 2007 (LPAC) - Just as LaRouchePAC has warned, repeatedly, the State of California is facing a gigantic hole in its budget, as the effects of the blowout of the housing bubble are rippling through the state's economy. The Los Angeles Times reports today that Gov. Schwarzenegger's finance department has ordered agency directors to put together plans for a 10% cut in spending for next year, as revenues are plunging, and the 2008-09 budget shortfall has exploded to more than $10 billion. These cuts will be substantial, with all areas targeted, including those with chronic shortfalls, especially education, health care and transportation.

Last August, when Schwarzenegger imposed his will on the legislature -- with support from key Democrats, who owe loyalty to the Rohatyn/Wall Street wing of the party -- to pass his already-austere budget for 2007-08, he said that this would put the state on a course toward zero budget deficit, even as most economists were forecasting a deficit of $2 to $4 billion. At that time, LaRouchePAC estimated there would be a $10-15 billion shortfall, due to the blowout of the hyper-inflated bubble in housing in the state, and that the Guvernator would come back with drastic cuts for the following year. Once again, LaRouche was right, and his detractors among those who were providing a cover for Schwarzenegger proved to be minimally incompetent, if not downright dangerous, in their disregard for the general welfare of Californians (see EIR, Aug. 11, 2007, "Arnie's Fascist Budget Hits Poor, Children" .pdf file ).

The deficit will worsen, as there is no bottom to this crisis. It never was a "housing crisis," but one of an underlying collapse of the physical economy. For those legislators who continue to insist that there is nothing they can do, as it is a "federal" problem, we say they should drop their bullshit, and join with legislators in Pennsylvania, Michigan, Missouri, Illinois, Florida, and other states, and demand that the Congress back LaRouche's Homeowner and Bank Protection Act of 2007. Resolutions in support of this legislation have been heard in cities councils throughout the state, and will be taken up by the Los Angeles County Democratic Central Committee in their November meeting.