The California Experiment Has Failed

I live in California and tuesday the voters went to the polls and voted on 6 propositions, 5 of which Governor Arnold Schwarzenegger said were absolutely essential to keep the state from failing into bankruptcy. I was happy to vote against all 6 of them.

Well, those 5 went down to overwhelming defeat. Nevermind that those propositions were poorly worded and wouldn't really fix the problem: overspending by the politicians. Prop 1A was particularly bad even though it claimed to create a cap on spending and a "rainy day" fund except that fund could be raided on sunny days.

The simple fact is that in 1999, the budget for the state of California was $75 billion, the first year that Gray Davis took office. By 2002, it was at $104 billion. Last year, it was at $145 billion. That's a 92% increase in 10 years. That means that spending increased double over the rate of inflation and population growth. If we had just held spending to the rate of inflation plus population growth, we'd be looking at at $15 billion surplus this year rather than the $42 billion deficit we have.

Yet according to Michael Hiltzik of the Los Angeles Times, the voters are the problem and the politicians are the solution. Get rid of the 2/3rds majority to raise taxes, get rid of term limits, and get rid of Prop 13 which limits property taxes.

No where in his article does he make any reference to the increased spending of the politicians as a problem. In fact, he doesn't mention spending at all. He seems intent on blaming this squarely on the voters and holding them accountable.

Let's contrast that with the op-ed from the San Diego Union Tribune. It doesn't blame the voters. It places the blame at the feet of the politicians, which is where is belongs. They were the ones that decided to increase spending beyond inflation plus population growth, not the voters.

California as an experiment has failed. By trying to go to "green" energy, our energy costs are the highest in the nation except for Hawaii because we refuse to drill for oil off our shores or build nuclear power plants. As a result, we have to import the majority of our energy. We have a severely regressive tax code with a effective rate of 9% (if you make over $45,000) and a 10% rate for millionaires (which I still think it high but at least they're making a million dollars.) Compare that with New Hampshire where their 6% rate kicks it at $335,000. Last year, more people left the state than moved in. Where did they go? To lower tax states like Nevada, Arizona, and Texas. We have spent and spent as if the good times would never end and now that they have, the politicians blame us and want more.

Sorry, I'm not having any of it.

This wouldn't be nearly as worrisome if President Obama's plan for the nation didn't look a lot like California: raise taxes on the "wealthy" (those making over $250,000), invest in green energy jobs (but no money for nuclear which emits zero CO2 into the atmosphere), and "cap and trade" carbon emissions (which is another energy tax).

They say as California goes, so goes the nation. If I were the rest of the nation, I'd be very afraid right now.

I'm Verbally Rioting In The Streets

Well, I'm pissed but since I need to stay at work in order to collect my paycheck, I'm deciding to riot at my desk rather than in the streets.

To paraphrase former President Ronald Regan's line from his nomination acceptance speech at the 1984 RNC "I would say that state legislators spend money like drunken sailors on shore leave, but that would be unfair to drunken sailors."

What is going on in New York and California this week is just absolute madness. New York Governor David Paterson submitted a budget this week that raises or imposes 137 new fees and taxes. In the middle of an economic downturn, he's proposing to raise taxes. In California, the Democrats who are constantly thwarted by the minority GOP in the legislature when they attempt to raise taxes, are now proposing to go around the GOP and impose new taxes by calling them "fees." They are attempting to cut a budget deficit that could reach $41 billion in the the next 18 months.

This quote particularly galls me.

"I still believe in bipartisanship," Senate President Pro Tem Darrell Steinberg (D-Sacramento) said at a Capitol news conference. "But there is an even greater responsibility than practicing bipartisanship, and that is to govern. And that is what we intend to do here today."

Your answer to governing is to raise taxes? That's it?

How about you cut spending? Cut the state income tax rate. Cut the corporate income tax rate. You might even have to impose cuts to the state's workforce. Oh wait, employee unions are resisting and they donate to Democratic campaigns so that is off the table.

And among the taxes you intend to raise are the state sales tax, the gasoline tax, and add a 2.5% surcharge to everyone's state income tax bill. These are three taxes that will hit the poorest Californians the hardest. I could at least understand their argument if they wanted to raise the top income tax bracket of 10% on people making over $1 million. But 2.5% on everybody? Are you freaking crazy?!

Has Darrell Steinberg seen the latest figures about people leaving California? For the fourth year in a row, more people left the state than moved in.

And where did they move to? Arizona, Nevada, Washington, and Texas. I'd like to note for the record that all of those states have lower income taxes than California. Texas has no state income tax. Yet Texas is not struggling to balance their state budget.

In 1998, people in the top 20th percentile paid 56% of all taxes in California. I cannot find the most up to date figures for 2007 but I'd be willing to bet that the same top 20 percentile now pays a higher percentage, if we look at the federal tax data which shows that people in the top 20th percentile pay 80% of all federal taxes.

What is becoming clear to me, and probably to some other people in California, is that you cannot balance the budget on the backs of a few millionaires and immigrant labor. It doesn't work.

When the dot-com boom was happening, did the state put away money for a rainy day? No. It spent and spent and spent.

And I'm going to spread the blame around to California voters as well. They keep approving bonds issues for projects like a high speed rail system when the state is broke. For the record, I voted "no" on every single issue that asked me for money this year. We're broke. We can't afford it. Stop spending money.

You know what I want for Christmas? I would like the California Legislators to come up with a budget that does not require raising taxes in a recession.

However, I'm not holding my breath.