The Golden State has been sending IOUs to vendors, contractors and others until politicians figure out a way to close its $26.3 billion budget gap. So far, according to press reports, about $230 million of these warrants have been issued.
Now comes State Assemblyman Joel Anderson – a Republican – who is sponsoring a bill to allow recipients of the warrants to use those warrants to pay their California income taxes. Yesterday, the bill was unanimously approved by the Business and Professions Committee and now is heading for the appropriations committee.
If this bill passes it will put California in the business of printing its own money. Already, according to a U.S. House budget committee staffer I know, the warrants are trading at a discount on E-bay and Craig’s List (they carry a 3.75% coupon).
If someone tells you that America isn’t going the way of Argentina, you might want to tell them about Joel Anderson’s excellent idea, one that, if it passes, might well be adopted by other cash-strapped states.