More stimulus spending would not have helped California, it cannot be targeted to California, there was no California bailout that was affordable.
The slow response by California was a creation of Brad Delong, long ago, by deficit obligations in the public sector. The Swamp had no choice, wait for California to catch up. We have the same choice now, will the Swamp wait around for Gavin when things go bad. No, New York cannot afford the bailout costs of California, no combination of the large states can afford it.
Standard Theory does not predict more government spending
Standard theory says the government channel is fairly fixed, Brad, fixed by you with insurance guarantees and price fixings every where. Standard theory predicts the Congress will be utterly helpless in the next down turn. Standard theory says the lagging effect of California has been growing over the Keynesian cycles, not reducing. Standard theory is the chart above, it says we are frigged in California, no bail out possible.
What standard theory applies?
The starting equation is built around government spending, so the dynamics is about maintaining a line of symmetry for government spending, a queue structure that captures a complete sequence of government transactions. The longest path in the queue is from the Swamp down to me, actually, the typical resident in the median town in the largest state. That is going to able a long sequence as we can see from the chart above. The swing time in California unemployment is the number of steps needed to adjust the queues from the Swamp to me. That government chain has to be equalized around my long term ability to fund the public sector out here. You have one problem, we went contango when Gray Davis was guv and the county dumped a huge billion dollar pension debt, suddenly, on me.
Brad will have to wait, meet my conditions, sorry. California can go into debt. But if Illinois has to wait on California, again, you may as well bulldoze Illinois right now.
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