The world’s eighth-largest economy has just gone belly-up. When midnight tolled on Tuesday night with legislators and Gov. Arnold Schwarzenegger still deadlocked over how to resolve the state’s staggering $24 billion budget shortfall, California became unable to pay its bills. The state will have to begin issuing IOUs to its creditors as early as Thursday. It is the worst budget crisis in the state’s modern history.
There is an unreal, almost dreamlike quality about this moment. Dreadful things are about to happen: Hundreds of thousands of children will lose their healthcare. Five thousand state workers will be laid off. Massive cuts will decimate education at every level. Social services will be slashed. Two hundred and twenty-nine parks, out of a total of 280, will be shut down. Even some of the state’s landmarks may go on the auction block to raise money.