FOX's Gallagher gushed over Schwarzenegger; claimed he's "balanced the budget"


On the August 31 edition of FOX News Live, Los Angeles bureau correspondent Trace Gallagher falsely asserted that Governor Arnold Schwarzenegger (R-CA) is "digging California out of a fiscal hole." About an hour later, in a second iteration of the same report, Gallagher further embellished this already false claim, saying Schwarzenegger "balanced the budget." In fact, Schwarzenegger only "balanced the budget" by relying on massive borrowing that other states have rejected. He has deepened California's "fiscal hole" by borrowing nearly $16 billion to cover shortfalls in his recently enacted fiscal year 2005 budget.

As the Los Angeles Times reported on August 1, "The budget Schwarzenegger signed is balanced with at least $15.6 billion of borrowing." At the same time, the legislature postponed difficult choices about potential budget cuts and/or tax increases. As the Times explained, this approach is distinct from that of many other states facing similar shortfalls, who have raised taxes and/or cut spending to eliminate these shortfalls in their FY 2005 budgets:

Corina Eckl, a state budget expert for the National Conference of State Legislatures, said no other state budget relied on as much borrowing as California's.

"When you look at the numbers, California stands alone. We are not seeing widespread pushing forward of budget problems," she said. "Most states are trying to resolve them in their entirety in fiscal 2005."

The $105.4-billion spending plan signed into law Saturday by Gov. Arnold Schwarzenegger includes a budget shortfall now expected to total as much as $17 billion over the next two years.

Even though the governor hopes to enact a sweeping reorganization of state government in the coming year that could save billions, the state's lingering debt looms like a long hangover, with today's spending causing pain years into the future.

The reason is simple: The state is making few sweeping spending reductions to keep the bills from piling up. And there is no plan to bring in more tax money to pay them in full. So California continues its credit card binge.

Posted In
Economy, Budget
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