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The California Budget, Bankruptcy, Clinton, and Obama
By Rosemary Shahan,
President
Consumers for Auto Reliability and Safety
Last year, Governor Schwarzenegger boasted about balancing California’s budget. Now it’s $14 billion out of whack. Why did California’s economy tank so suddenly? Many factors contributed to this fiscal meltdown. But President Bush’s drastic changes to federal bankruptcy law should not be overlooked. Ironically, the law’s enactment also illuminates a stark difference between the leading Democratic Presidential contenders.
When the Republican-controlled Congress and President Bush changed the rules for consumers who file bankruptcy, they encouraged banks to engage in reckless lending practices. They sowed the seeds for widespread predatory lending and the ensuing home mortgage debacle that is hitting California with the worst tidal wave of foreclosures since the Great Depression. The dramatic downturn in the housing market is now eroding California’s tax base and costing our state billions.
The Bush-backed bankruptcy bill was vehemently opposed by a large coalition of consumer groups, labor unions, academics, economists, and bankruptcy attorneys who warned that it would harm hard-working people who fall on hard times. They cited the leading causes of bankruptcy: high medical bills, job loss and divorce.
But Bush and the Republican Congress were falling over themselves to do the bidding of the large banks, credit card companies, auto dealers, and investment firms that had put them in power. Those interests salivated over the killing they would make by shifting the risks of their reckless lending practices onto consumers.
Former President Clinton had pocket-vetoed a less irresponsible measure in sunnier economic times. Banking interests and auto dealers retaliated by backing Bush and opposing Gore. When Bush took office, they were ecstatic. In March, 2005, with his trademark smirk on his face, Bush signed the bankruptcy bill. Thus he delivered for many of his campaign “pioneers” and largest sources of political cash—and ushered in an era of unfettered greed.
Two of the leading Democratic Presidential candidates had an opportunity to vote on the federal bankruptcy bill. Consumer groups sought an ally in New York Senator Hillary Clinton, who as First Lady had urged her husband to veto the earlier bankruptcy bill. She was very familiar with the issue and knew exactly how devastating the changes would be for vulnerable people, especially single parents with children. But their hopes were dashed. While her Democratic colleagues spoke eloquently against its passage, and sought amendments to soften the blow, she caved in to Wall Street, and voted for it in various forms. That hurt immensely. In the end, on the final version, she waffled and failed to vote.
Senator Barack Obama stood his ground and voted against it.
Now California is suffering profoundly from the economic aftershocks. Both candidates are seeking to portray themselves as champions of Main Street, not Wall Street. But only one of them stood up to Wall Street when it counted the most.
Rosemary Shahan, President of Consumers for Auto Reliability and Safety, is a nationally renowned consumer advocate who has won many victories for car buyers. She is best known for initiating California’s landmark auto “lemon law” and fighting for the installation of air bags in all cars. She has repeatedly testified before Congress on auto safety issues. She has received many prestigious awards from consumer groups in recognition for her work and is widely quoted by national media as an expert on auto issues. Shahan serves on numerous progressive boards, including the Consumer Federation of California and Consumer Federation of America.
Comments
Goodness, another "bad Bush" or "Bad republican" being at fault for something DEMOCRATS were involved in!
Who is the majority party in the legislature? Democrats.
Who ran the committees working on the budget ALL YEAR? Democrats.
Who, very meekly and without effect, tried to hold up the budget for cuts? Republicans...
Who crucified those republicans for doing so? Democrats.
Didn't McClintok say there would be a deficit of this magnatude last September? I guess no one listens to those republicans...
IF-IF Bush contributed to this situation, how do you explain the sheer magnatude of the budget presented by the Democratic majority to the Governor being over $14 BILLION?
Will Bill Cavala once again say this is the republicans "fault" as they did vote for this budget? Another way to remove the 2/3 vote required to pass budgets in the future (Obvuously by the majority democrats as the minority republicans won't matter anymore).
Then using Bill's logic isn't it apparent the democrat majority passed this particular stinker of a budget all without beiong restricted by a 2/3 vote "limitation"?
Look, it is time for a bucket of cold water on OUR STATE BUDGET and the buffons who created this. Just holding the party line and not taking a fair share of the respionsibility is irresponsible, shallow and demented.
Also, when will folks take responsibility for selecting an ARM in the first place? Let the buyer beware, read the fine print, don't buy things you cannot afford. (Rent, is also an honorable option-most start out on their own this way...)Where is the personal responsability? Where is the responsibility of the taxpayers as a whole to bail these negligent ARM buyers out?
Posted by: Jay Gould at January 8, 2008 08:47 PM
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