Proven right so soon?

Yesterday, I predicted that Obama's refusal to bailout California was only temporary, and that it would eventually come in the form of a bailout-lite. My thinking is that, after bailing out GM on the grounds that it is "too big to fail," Obama can't justify not doing the same for "way to big to fail" California.

Today, the Washington Post reports that the softening of the refusal rhetoric has already begun: (emphasis mine):

After a series of meetings, Treasury Secretary Timothy F. Geithner, top White House economists Lawrence Summers and Christina Romer, and other senior officials have decided that California could hold on a little longer and should get its budget in order rather than rely on a federal bailout.

These policymakers continue to watch the situation closely and do not rule out helping the state if its condition significantly deteriorates, a senior administration official said. But in that case, federal help would carry conditions to protect taxpayers and make similar requests for aid unattractive to other states, the official said. The official did not detail those conditions. . . .

It's just a matter of time. And as the article points out, the reluctance is due not to philosophical reasons, but rather out of fear that other states will demand similar handouts. As soon as they figure out a rationalization for helping some states and not others, it will be full speed ahead.