President Obama’s first economic decisions was to freeze salaries of some government employees.   It won’t be long before layoffs come and people who think that government jobs are as secure as US Treasuries might find themselves in a world of hurt.

The pay freeze, first reported by The Associated Press, would hold salaries at their current levels for the roughly 100 White House employees who make over $100,000 a year. “Families are tightening their belts, and so should Washington,” said the new president, taking office amid startlingly bad economic times that many fear will grow worse. -San Francisco Chronicle

State jobs are even in more dire situation as the states don’t have the cash to pay employees.   California is issuing IOU’s instead of refunds and even that will only hold off the budget shortfall by a drop in a bucket to the outstanding debt.

By some estimates, California’s current expenditures through fiscal year 2010 will reach $145 billion. And state revenue will only be around $100 billion—a massive $45 billion shortfall. And that is if the economy doesn’t deteriorate more than expected, and if the state doesn’t get hit with another wave of unprecedented lightning storms, fires, drought, or other natural disasters.

Lawmakers are at loggerheads over how the state is to cover expenses.

The state is spending so much money that Governor Schwarzenegger could fire every single California civil servant and still not come close to balancing the budget! Even if he also fired the other 149,000 legislative aides and people who work for the state’s courts or university systems (people not directly under the state’s control), he still couldn’t eliminate the deficit. -The Trumpet

What I’m curious about is what happens when a State is unable or refuses to remit money to the federal government.   The money in Washington comes from somewhere and if that somewhere doesn’t have the cash then there’s a problem.    The borrowing over the past few decades has come from Japan and recently China.  An assumption that the money will keep coming may make things significantly more problematic when it doesn’t come.

All I can advise is for you to have a plan.   It’s getting very scary out there right now because what follows isn’t too pretty.  I’ve already noted a serious increase in crime in my home city and I can see it easily getting worse.