Well, it’s coming to a head on the left coast, and pay attention because it’s probably going to be the microcosm of the coming Federal fiscal mess to come.

Think of it, years of Democrat leadership, taxing and spending their way to the brink of an abyss, and the problems California had when they started are worse now instead of better. Any problem seen, the answer was to simply throw money at it and hope it would go away. Politicians were playing not to the problem, but to the voter.

Now, again, it’s crunch time but this time what was put off until later cannot be ignored due to the housing crash with resultant construction job loss and loss of tax revenue as homes and land are de-valued. You already know about the nationwide banking and mortgage fiasco, and the financial toilet that is California is being flushed February 2009, less than two months from now, California will be out of money.

Gov. Arnold Schwarzenegger Friday ordered mass layoffs and unpaid furloughs for state workers starting in February to address California’s growing fiscal crisis.

Of course the state employee labor unions flipped over backward at this;

“The governor’s order was condemned by officials of state employee unions, who vowed a legal challenge. Democratic legislative leaders voiced angry disappointment but said they were willing to return to negotiations with the Republican governor to solve the state’s financial problems.”

While Democrat lawmakers were pointing fingers at the state GOP minority, one of the more promising leaders of the minority revolt, Chuck Devore, spoke out in an article written for Investor’s Business Daily;

“In the past 10 years, under both Republican and Democratic governors, legislative Democrats have presided over a doubling of the California budget, from $72 billion in 1998 to $145 billion. This is double the rate of population and inflation growth, and it is unsustainable.

“How unsustainable? California may have a $42 billion deficit over the next 18 months, an astonishing 30% of revenue expected just a few months earlier. California may run out of cash by the end of February, causing state financial officials to vote on Wednesday to halt $4 billion in construction spending. A California bond maturing in 30 years yields about 6.89% – 1.8 percentage points more than three months ago.

“California has the nation’s highest income taxes, the highest state sales tax rate, the highest gas tax and the highest corporate tax in the western U.S. And contrary to popular mythology about Proposition 13 (passed by the voters in 1978), the state’s property taxes are at the national average.

“Forbes magazine ranks California as having the highest business costs (taking into account taxes, labor and energy). The Tax Foundation ranks California as having the 48th worst business-tax climate, down from 38th just three years earlier. Only New Jersey and New York are assessed as more hostile to business.

“Clearly, California does not have a yawning budget deficit because of a light, business-friendly tax burden. California has a spending problem, not a revenue problem.”

But with all this, the Democrat majority offers up merely $8 billion in reductions, hoping to make up the rest by “taxing the taxes” of the overtaxed.

“Taxing the taxes”? Believe it or not, yes. I’d laugh if it weren’t me in the bull’s eye.  I work two jobs, barely make over $50k per year, and believe it or not, that puts me at the same tax rate as someone making one million dollars per year, a little over 9.4%. With the Democrat plan, they would add a surcharge on the amount I owe of another 2.4% to what I owe for the year. Not a tax, a surcharge. Legally they can’t raise taxes without a 2/3 vote by legislature. A fee or surcharge, only need a simple majority. Simple.

Well Arnold vetoed the thing, saying it “punished the workers”, but state Democrats are casting blame in a totally new direction.

Yesterday Assemblyman Devore appeared on a local radio show at KFI in Los Angeles and explained what happened in Sacramento, which can be heard here (forward to 21:15).

What happened next was a melting of the Governator’s phone lines statewide, followed by an announcement by Schwarzenegger saying he was going to veto the entire package.

Blame it on talk radio.