California Dreamin’

As I’m in the Golden State for a few days, I thought it appropriate to post something on the state’s principal political issue, the state budget:  

California Begging, an editorial in the Investors Business Daily:

“The once-great state of California has been reduced to begging from the federal government. But no matter how much help the feds give, the state’s fiscal ills won’t end until its lawmakers stop spending money.”

The paper notes California’s impending $21 billion dollar deficit for the fiscal year – which comes on the heels of last year’s $12.5 billion tax increase and $6 billion in borrowing to pay the bills. This is not to speak of the accounting gimmicks that governments regularly use to balance the books. Gimmicks that can’t hide the truth forever – only obscure it temporarily.

Some other interesting facts from the editorial: California represents 13% of the nation’s population, but is home to one third of the country’s welfare recipients. The jobless rate is more than 12%, higher than the national average. The state ranks 48th in business-tax competitiveness. And businesses and entrepreneuers continue to leave the state, a trend that started several years ago. 

Now, Governor Schwarzenegger wants a bailout from the federal government. As absurd and offensive as the idea may seem, it makes sense from his perspective. There are few political allies to work with in an effort to cut state government spending. You can only raise taxes so much – something California has already been doing.  Why take more political heat attempting to do either one, when Uncle Sam has been bailing out everybody from banks to car companies?

The real problem, as IBD notes, is uncontrolled spending in Sacramento. Democrats have held the state legislature for years, and to a great degree have let government employee unions call the shots on public policy-making. That’s a recipe for disaster – bankruptcy, in this case – and that’s exactly what’s happening in California.

Calfironia Dreamin’ (the fantasy that you can operate according to anti-business, pro-welfare principles and still enjoy the good life) is turning into a nightmare. If anything good can come of this, perhaps it is that the nation at large, and Washington politicians in particular, will see what unfolds and take note of the lessons to be learned.


1 Comment

Filed under Bailouts, Economy

One response to “California Dreamin’

  1. John

    you know, I thought that when the voters of California tossed out Davis and elected Schwarzenegger over Bustamente, things would improve – but embarrassingly enough, we’ve seen almost as poor performance out of this quasi republican as we did from his predecessor. shameful.

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