Is California Greece with better wine? California and Greece both have massive public debts, shrinking economies, and declining bond ratings that have made it difficult for them to continue to borrow.

But California’s budget deficit of $20 billion is only about 1% of the state’s nearly $2 trillion economy. By contrast, the Greek deficit is around $43 billion equal to about 13% of its GDP. So perhaps we can relax in California.

Comparing the size of our relative deficits misses the real point of comparison. The current crisis in Greece was triggered by rising interest rates as a result of falling bond ratings. The same phenomenon is underway in California. Both California and Greece wracked up this enormous indebtedness under conservative governments that refused to raise taxes or cut expenditures. Both economies simply lack the political will to act. The Greeks have a left-wing coalition government threatened with a revolt by the communists and the labor unions. California’s Republican governor is threatened with a revolt by right-wing ideologues in the state legislature. What most commentators describe as an “economic crisis” is in fact a “political crisis” in both California and Greece. And unfortunately for Californians, Governor Schwarzenegger is no George Papandreou.

The E.U. has demonstrated an embarrassing lack of unity in responding to this crisis, even as it spreads to Portugal, Spain, and Italy. The Europeans are unwilling to stand with Greece and provide sufficient credit to keep the Greek economy afloat. The other European governments blame the Greeks for their profligacy — disguising the extent of their debts, evading income taxes, and supporting a bloated state bureaucracy that dominates 40% of the national economy and offers benefits like two extra months of pay for public employees,and retirement pensions for workers in their 50’s.

We are told that California need not worry; that if California was close to defaulting on its massive debt we could surely depend on Congress to rescue it. Really? I’m not so sanguine. It’s hard not to imagine senators filibustering any bill to assume California’s debt.

The responsibility for paying our debts ultimately lies with ourselves. We Californians need to mend our ways. That has to include budget cuts, structural reform, and increased taxes.

Our state legislature is unwilling to consider tax increases. Instead, the legislature has tried to trim little bits of the deficit by slashing public schools and quadrupling tuition at public universities. These school cuts and tuition increases are burdening the state’s future and driving people out of California. The University of California has long been the engine of the state’s economy. Without it California is just Nevada with a coastline. But unfortunately, the same folks who are unwilling to tax income have no trouble voting to tax potential.

Nobody likes to pay taxes, but the reality is that Californians are under-taxed compared to other major industrial economies that provide the kinds of social services and protection that we expect in California. With the governor’s race now on, you won’t be hearing much serious talk about raising taxes from any of three candidates. Perhaps the catastrophe that Greece now faces will persuade some of our leaders that it’s time to make hard choices and take responsibility – and stop passing the burden onto our kids.

This week the Obama Administration, after a year of perseverating, finally came forward with a modest proposal to tax big financial institutions, and Republican leaders reacted as if the President were proposing to nationalize the banks.

What President Obama has proposed is a relatively modest tax on the assets of the largest banks in the country. It’s not much different in form than the tax you pay on your property. The President argues that the tax would ensure that the banks pay back the government for the financial rescue package. But the more important reason for taxing bank assets is that big banks have behaved recklessly with the confidence that they were too big for the government to allow them to fail. The Bush Administration handed out cash to rescue the banks with the same lack of accounting that they handed out cash in Iraq and Afghanistan. No one insisted that taxpayers were entitled to any share in the bank’s profits after the crisis passed.

In a system in which companies are regarded as too big to fail the rules are stacked for the big banks: heads the bank win; tails the taxpayer loses.

Without a tax on bank assets we have subsidized record bank profits, and now Wall Street is handing out billions in bonuses to reward their executives for surviving the financial crisis they created. It’s not just the taxpayers who are being ripped off. Even the banks’ own shareholders have been short changed.

But the big banks weren’t the big story this week. The big story was the Supreme Court’s decision to reverse a century of established law and strike down limits on corporation spending in political campaigns. The case before the Supreme Court involved the narrow question whether a television film financed by a corporation that disparaged Hillary Clinton on the eve of a presidential primary should be regarded as a political expenditure subject to limitations on corporate spending. Even Justice Scalia had to admit that of course the film was a political attack ad.

But the Court didn’t stop by ruling on the nature of the ad. Instead of just deciding the case, the five activist conservative justices reached out to strike down any limits on corporate expenditures. They reasoned that corporations have the same free speech rights as anyone else.

The difficulty with corporate speech is that corporations can outspend anyone else by a huge magnitude and thereby intimidate officeholders from supporting legislation against the interests of big business. Imagine now the difficulty the President will have getting any legislation through Congress taxing big banks or regulating health insurers. Any representative who votes against big business will face a tidal wave of attack ads.

Competitive free enterprise is a great thing, but corporations are what lawyers call a “legal fiction.” Corporations are created under state law for the purpose of allowing shareholders to aggregate their investments and create greater wealth for themselves and the nation. Corporations are not political parties.

I don’t want my pension funds invested in a company that supports political candidates. I want my money invested productively, and when my company earns big profits, I don’t want to share my profits with either corporate executives who reward themselves with bonuses or politicians.

What can be done now after the Supreme Court’s decision? Congress can use its power to regulate commerce to require that companies must disclose to their shareholders all of their political expenditures in advance and obtain their shareholders’ approval before spending company assets on political causes. But who will be willing to stand up in Congress and propose such legislation against the implied threat of millions of dollars of attack ads financed by big business?