MR. CAVUTO: Well, so far even Arnold is worried about this. California Governor Arnold Schwarzenegger holding an emergency meeting with his top officials on that state's budget crisis. He's already asked Washington for a $7 billion rescue to get California over the hump. California State Treasurer Bill Lockyer notes that it's not a rescue, it's really a loan, and the state will pay it back.
Treasurer, good to have you. Folks are worried that you won't pay it back, and the tin cup has been passed. What say you?
MR. LOCKYER: Well, I don't think there's any reason to worry. We're trying to move short-term notes. And of course, we are having trouble doing that, as is everyone, with the credit market freeze that we're encountering. So hopefully, whether it's going to capital markets, whether it's participating in the commercial paper new rules that allow that to be picked up by the private sector, we're hoping the public sector could maybe benefit also from that opportunity or this sort of buy our notes for the next several months.
MR. CAVUTO: All right. Well, you know, several months ago we didn't think we'd even have a credit crisis in this country. So you know, I know California is good. I love California. I love everything about California. But I also now know, Treasurer, you know, a lot of folks are caught between a rock and a hard place here. And people who thought they could pay back or make good on their money can't make good on their money. So you almost sound like a beggar who comes to the lender and says, I will make good on it, and the lender says, prove it, and you really can't, right?
MR. LOCKYER: Well, actually, the proof is money keeps coming in. Even in a bad year, there are revenues. For us, it's constitutionally guaranteed that we have to pay debt service. It's real near the front of the list of things we pay. And there's a continuous appropriation. Now, you know, our problem this year is we had a very, very long budget fight which partly is caused by the fact that we're one of the three states that require a two-thirds vote to adopt a state budget.
MR. CAVUTO: But that's your fault, Treasurer. I know, that's your fight, and I'm not picking on you. You're trying to do your job and get some money.
MR. LOCKYER: I'm just saying --
MR. CAVUTO: I hear you.
MR. LOCKYER: There's no --
MR. CAVUTO: I know, I know, I know. You're trying to fix it and make it fiscally sound.
MR. LOCKYER: There's no risk of default is my point.
MR. CAVUTO: Well, you know, Washington Public Power Supply said that in 1982 and it did default. Now, my only point picking on your --
MR. LOCKYER: Well, that's not true by the way, but okay. Go ahead.
MR. CAVUTO: My point to you is 49 other states are going to look at your problem and say the treasurer, the governor want to go to Uncle Sam for some help. Uncle Sam doesn't appear to have any money. I don't know where he keeps creating this money, and now you want him to create more. And folks at home are going to be listening to you. And they're good folks, and I think they think you're a good guy. But they're going to say the well has run dry, no.
MR. LOCKYER: Well, I understand that. And what we're saying is not give us money, it's not a bailout. If you're buying up commercial paper from General Electric or whomever, why don't you buy commercial paper from us also. We've got that, and we have the same problem that everyone else does in moving it and paying our bills.
MR. CAVUTO: But you know what I need, Treasurer, this sounds like I'll gladly pay you tomorrow for a hamburger today. I'm just thinking I know that's not your intention here, but everyone has a good argument for money, and you have a great case for it. But we don't got no money, you know what I mean? We're in that dilemma.
MR. LOCKYER: Well, you know, I don't know. Maybe that's the fact. I'm not sure that's accurate. You know, our problem is the revenues come in largely in April but we have to pay bills in November and December, so we do short-term borrowing. It's routine. We always do it. It's always fine except for this frozen credit market that makes it impossible. So that's the problem.
MR. CAVUTO: You know, my American Express bill is due this month. I would rather pay it off in June. But American Express came back to me and said no, Neil, we would rather you pay it off like now. I don't have that liberty. Folks at home do not have that liberty, Treasurer, you know.
MR. LOCKYER: No, Neil, they'll let you pay that off if you want to pay the interest. That's what we do, too. Same thing.
MR. CAVUTO: I'm going to get back to American Express. I'm going to try that. I'm going to try that. They seem like pretty amenable folks. I'll try it.
MR. LOCKYER: If you pay the charges, they'll let you pay it later.
MR. CAVUTO: Okay. Could someone get American Express on line one for me? Thank you very much, Treasurer. Thank you very much. Always good seeing you.
MR. LOCKYER: Thank you, Neil.