California has long had the reputation of being trend-setter to the nation. The Golden State was practicing Obamanomics back when Barack was still called Barry. And now its ways are catching up to it like a hard partier who looks in the mirror one day and sees the portrait of Dorian Gray staring back at him.
Get ready America: California’s unsustainable path is echoed by the federal government. One will crash before the other, giving us all a preview of things to come.
Part of what is slowly destroying California is its move from a land of plenty to a land of locusts. The state taxes and regulates resident companies to such an extreme extent it has driven many of them, and many tax-paying citizens, to other states. For decades California was a place to migrate to. Now it’s suffering an exodus. The fault lies in a political shift from being a conservative, low- tax state to a statist, high-tax nanny state. Californians used to be the freest people in the United States and the world, and now? Not so much.
A recent Heritage Foundation study of economy freedom found the U.S. to be No. 8 on the list, down there with Chile and under quasi-socialist Canada. California has been a leader of governmental policies for years, and whichever new law they pass usually makes its way east to Washington. Look where that got us.
You can trace the problems back to assemblyman Willie Brown’s tenure as State Assembly Speaker for 15 years. He was so effective getting entitlements and other statist policies through that Republicans had to get a term limits bill passed to retire him. By then the rot had set in.
Not surprisingly, Brown hails from San Francisco, the town that gave us Nancy Pelosi, Barbara Boxer and Dianne Feinstein. It’s the worst run city in the US, and the flagship of what today is arguably the worst-run state. What a sad descent from the vibrant place of plenty and promise it was in the 1950s.
If driving away tax revenue producers wasn’t enough, California has over five hundred government agencies, departments, and commissions regulating just about everything under the sun. Such as the California Acupuncture Board, the California Avocado Commission and the California Children and Families Commission. A search on some of these commissions will find plenty of articles about questionable spending and waste. When you compound that with the fact they all have massive payrolls you come to the other card holding up this shaky edifice.
CALPERS (CALifornia Public Employees’ Retirement System) is a time bomb, like Social Security and Medicare. Many people depend on it, and it may financially collapse the state. For decades, people thought government jobs were the safest bet for long term retirement and benefits. But the money paying for that comes from somewhere. Namely, the taxpayers that the state has been driving away. The Wall Street Journal noted that:
Approximately 85% of the state’s 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, “This year alone, $3 billion was diverted to pension costs from other programs.” There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility.
Many of these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year’s pay. The pensions for these (and all other retirees) increase each year with inflation and are guaranteed by taxpayers forever–regardless of what happens in the economy or whether the state’s pensions funds have been fully funded (which they haven’t been).
It’s no surprise that so many people have sought government jobs. President Obama wants to lure college students who take government loans to take government jobs. Many of his schemes involve, naturally, more public sector jobs. We already have more people working in civil servant jobs than in the private sector. Government jobs only exist by taking money from tax payers to fund them. That means there are more vampires that blood donors.
California is going broke. It spends more than it takes in and it shows no sign of stopping. The state could easily cut tons of worthless projects and commissions. They could make California more attractive to businesses by cutting taxes. They could try to change their union deals, which are out of control. But they seem more likely to just ask the federal government to bail them out.
Take a look at the CAFR (Comprehensive Annual Financial Report) for the state from 2008 to see what kind of money they’re playing with. The numbers listed are in the thousands, so it’s higher than it looks at first glance. The United States is being run the California way to a much more ridiculous degree.
And that way lies madness.
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