Saturday, February 21, 2009

Why I Weep For California

Two links at NewsAlert were so harsh that I felt hit below the belt: the first, a Wall Street Journal piece, compares California's welfare state to France, while the second refers to California as the Michigan of the West.

Now there's much to recommend the Old World. California brings to mind my last home, France -- God's country blessed with fertile soil for wines, sun-blanched beaches, and a well-educated populace. Amusingly, both states are led by bling-bling immigrants married to glamorous women and elected to shake up the status quo. In both departments, the governator got a head start on Nicolas Sarkozy in Paris.

The parallels are also disquieting. The French have long experienced the unintended consequences of a large public sector. Ask them about it. As the number of people who get money from government grows, so does the power of constituencies dedicated to keep this honey dripping. Even when voters recognize the model carries drawbacks, such as subpar growth, high taxes, an uncompetitive business climate and above-average unemployment, their elected leaders find it near impossible to tweak the system. This has been the story of France for decades, and lately of California...

California's constitution locks in higher spending in good years, paving the way for huge deficits in the down. A dependence on a highly progressive tax code leaves it particularly vulnerable to boom and bust cycles. Democrats run the legislature. Across the street from the Capitol, the offices of unions and lobbyists are arguably the real locus of power in Sacramento...

California is in a French-like bind: unable to afford a welfare-type state, and unable to overhaul it. "The people say they want all these programs, then there's nothing they want to pay for," says Hector De La Torre, a Democratic assemblyman. "The schizophrenia in the legislature reflects the peoples'"...

Some Democrats and Republicans privately say the best option may be failure. The rough scenario is fiscal insolvency, followed perhaps by federal receivership. No precedent or legal avenue exists for a state to reorganize its affairs under a form of Chapter 11 protection, but that striking suggestion sounds better by the day.


That's from the Journal. Let's see what's in the other link:

If the future happens in California, we all should tremble at its ever-expanding debt, falling credit ratings, crushing pension obligations, suffocating regulation, and rising taxes — with environmentally preening, ill-considered restrictions on carbon emissions thrown on top. California Democrats are only slightly ahead of national Democrats, so the country’s fiscal future may be in preview in Sacramento...

California has roughly doubled its budget during the past ten years...

The politicians aren’t entirely to blame, although at every sign of the unsustainability of the state’s fiscal practices their reaction has been to resort to more gimmicks and borrowing. California’s voters have recourse to an initiative process they have used to make responsible budgeting as hard as possible. They passed a proposition in the late 1980s that basically locked up half of state spending for the schools, no matter what. Even in November, with fiscal disaster looming, they passed another $10 billion in bonds for high-speed rail, apparently on the theory that a state can never have enough debt.


Let's not forget $6 billion in embryonic stem cell research, because that's a high priority for California government. But I digress....

The new budget deal will cut about $15 billion in spending and raise roughly the same in taxes, including the car tax over which Schwarzenegger pounded Davis in 2003. The deal has its worthy provisions, but fundamentally it is more of the same. California will remain overtaxed, overregulated, and overburdened by a public sector that is the state’s sole boom industry...

Schwarzenegger now governs the Michigan of the West. California has the fourth-highest state unemployment rate in the nation and is routinely ranked among the worst states in its business environment. Almost 1.5 million more nonimmigrants have left the state than moved to it during the past ten years.

Once, Schwarzenegger was supposed to be a model for a more appealing, more moderate Republican Party — socially liberal, yet fiscally conservative. All he has demonstrated is, to paraphrase Barry Goldwater, that moderation on the road to fiscal ruin is no virtue.


Lest you non-Californians want to laugh at those of us out here on the Left Coast, I remind you--this is exactly where the federal government is headed. Where, exactly, is the Speaker of the House from? And have you seen any signs of fiscal sanity (or even knowledge) from the president?

I need to think more about moving back to Colorado. Seriously.

4 comments:

silvermine said...

I know... I stay out here because my parents are here. Otherwise, I think I might be back in Texas.

Ellen K said...

Hey, things aren't looking so hot here lately. As a math teacher, you would have a shoe in Darren, but frankly, I am going to test for my ESL certification because I honestly don't think fine art will survive the coming economic crunch. And I am the only one working for a regular salary right now.

PeggyU said...

My daughter is in California. Wish she would move back.

Ellen K said...

Hey, Darren, we don't have skiing mountains, but we do have the remote beauty of Big Bend. Also, if you move to the panhandle, New Mexico offers decent skiing and it's only a few hours away. Shoot me an email and we'll find you a spot.