November 19, 2012

California: The Consequences of Magical Thinking

Marc Comtois

As goes California...

[H]ow is California doing, now that liberals have successfully terminated the state's remaining conservatives?

For starters, it's still in debt. Despite Brown's historic tax hike, the California Legislative Analyst's Office announced this week that the state still faces a $2 billion budget deficit just for the next fiscal year. California's liberal electorate has already racked up an additional $370 billion in state and local debt over that last decade. That is more than 20 percent of the state's gross domestic product.

According to the California State Budget Crisis Task Force, that comes to more than $10,000 in debt for every Californian. And because the state's credit rating is so low, California taxpayers must fork over about $2 for every new dollar borrowed. In 2012 alone, the state budget included more than $7.5 billion in debt service -- more than most states' budgets.

Don't think for a second that California's chronic deficits are caused by low taxes. Even before last Tuesday's tax hikes, California had the most progressive income tax system in the nation, with seven brackets, and the second-highest top marginal rate. Now it has the nation's highest top marginal rate and the nation's highest sales tax. And the budget still isn't balanced.

The real cause for California's fiscal crisis is simple: They spend too much money. Between 1996 and 2012, the state's population grew by just 15 percent, but spending more than doubled, from $45.4 billion to $92.5 billion (in 2005 constant dollars).

What are Californians getting for all this government spending? According to a new census report released Friday, almost one-quarter, 23.5 percent, of all Californians are in poverty. One-third of all the nation's welfare recipients live in the state, despite the fact that California has only one-eighth of the country's population. That's four times as many as the next-highest welfare population, which is New York. Meanwhile, California eighth-graders finished ahead of only Mississippi and District of Columbia students on reading and math test scores in 2011.

Middle-class families that want actual jobs, not welfare, are fleeing California in droves. According to IRS data compiled by the Manhattan Institute, since 2000, almost 2 million Americans have left California for other states. Their most popular destination: Texas.

It isn't a tough move to make. Thanks to low taxes and simple regulations, Chief Executive magazine ranked Texas as the best state to do business in for 2012. Guess who ranked dead last? That's right, California. And not only does Texas (6.8 percent) have a far lower unemployment rate than California (10.2 percent), but, according to the Census Bureau, income inequality is worse in California than it is in Texas.

For more on California, Victor Davis Hanson--a native of the state--has been regularly charting the decline (here, for example). The Golden State is but the largest canary in the coal mine of states who've succumbed to unsustainable budgeting thanks to the magical thinking of Democrat-dominated polities. Illinois is another. And Rhode Island.

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Just like the socialists of Spain and Greece, America's socialists may win the battle but when the economy collapses they will lose the war. Though the brainwashed will still be in the streets squealing "TAX THE RIIIIIIIIICH!".

Posted by: Tommy Cranston at November 19, 2012 12:54 PM

I always wondered why other states advertised as a tourist destination while California wanted people to move there permanently. It all makes perfect sense.

Posted by: Max D. at November 19, 2012 1:25 PM

As goes California - the best part of that article is the always present conservative reference to "The Gipper". Those references always seem to forget the massive debt he left us with, along with Bush (1 and 2) and now Obama. Someday a fiscal conservative like myself will have a party to vote for and not ones(Rep and Dem) that only find it convienent when out of power.

Posted by: Jack Thompson at November 19, 2012 5:08 PM

Someday a fiscal conservative like myself will have a party to vote for and not ones(Rep and Dem) that only find it convienent when out of power.
Posted by Jack Thompson at November 19, 2012 5:08 PM

Good points. Republicans need to return to their libertarian and isolationist roots. You can't create a sustainable government without dismantling the military-industrial complex, ending the national police state and the "War On Drugs".
However, it must be said that the the "massive" deficits of Reagan/Bush sure look good in the era of Barry Zero.

Posted by: Tommy Cranston at November 20, 2012 12:50 PM

good article. Takers have reached critical mass and it will only get worse.

Posted by: Bob at November 20, 2012 8:46 PM

California continues its Bread and Circuses style leftist politics while the state decays as the liberals legislate. Moonbeam Brown was resurrected from the failed ash heap of history by a populace seeking to live off the fat of the land without working but instead by taxing the "rich". In California the rich are people who work,own a business and are successful. Many have moved here to Fort Worth and DFW. No state income tax, reasonable housing,warm climate and a thriving "evil" oil and gas market. Kalifornia will eventually be bailed out by the US taxpayer (much like Greece with Europe). Look on the bright side. Soon Kalifornians will have all the free legal marijuana they can choke down. They will then forget they are jobless and march down to the Munchie Administration Bldg. for their next govt. handout. It's only fair.

Posted by: ANTHONY at November 20, 2012 11:22 PM
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