Lessons from California

With the New York Times, George Will, and the Washington Post all writing about the failure of California, it may be useful to take a look at root causes as well as effects. I'll try.  

First, some data points for those who don't understand (or acknowledge) how bad things are:

- The Golden State has an unemployment rate at 12.5%, and one of the nation's highest home foreclosure rates.  A recent Business Week survey of best 25 cities for employment growth in 2010 had none in California. We are about $6 billion short on the current budget cycle, expect to be about $15 billion short for the year starting in July, and the Governator has unsuccessfully gone to Washington begging for the same treatment that Louisiana and Nebraska are receiving.  

- As a result of budget squeezes in the last several years, California now ranks near the bottom of the pack in terms of quality of public education, and business climate. We have the lowest credit rating in the nation - about equal to Kazakhstan and Greece. 

Not a pretty sight. But those are results; lets talk about the causes.

As for the state budget deficits, a root cause is the decline of the tax base. Reliance on the more volatile income and sales taxes rather than property taxes (due to Prop 13 limits) hurts revenues in down cycles, but the problem is more fundamental.

- With the closing of a joint GM/Toyota factory in March, we will lose the last auto assembly plant on the Left Coast and about 30,000 good jobs - there has been some mourning, but no introspection. With personal tax rates of up to 9.55%, there has been an exodus of hundreds of thousands of high income payers who can choose where to live and manage their businesses. Yet we have new mandates to increase "sustainable" (non-nuclear) power generation to 33% in 10 years, our own "cap and trade" system, and the country's first "green building code", all with no thought to the economic consequences of further increasing our country-leading utility rates. Out here, environmentalism still trumps jobs every time.   

- Nationally, I would applaud the saving of the automotive segment of American manufacturing (to be privatized by a future conservative president), and President Obama's extension of President Bush's "No Child Left Behind" with his "Race to the Top" with its emphasis on accountability and parent choice. (Over union objections, the California legislature has decided to apply for the grants.) On the other hand, The EPA decisions to further restrict CO2 and ozone, and the impact of health care legislation on businesses look much like anti-business California. And while individuals cannot realistically emigrate, their money can, and funding by foreigners of our trillion dollar deficits will become increasingly expensive.

And as for California's political problems, the root cause is the insatiable appetite of government and the people.

-  Virtually everyone agrees that California's governmental system is broken, and there is a growing call for a constitutional convention to start over. Much of the impetus from the Left is to make it easier to raise taxes - repeal Prop 13, and repeal the two-thirds legislative vote requirement to raise income and sales taxes. But the problem is bigger - as Pogo says, "we have met the enemy and it is us" - direct democracy in the form of the initiative. After 9/11 the public loved the police and firefighters, so we gave hugely generous pensions which bankrupted cities; we love nurses, so we voted in mandatory low nurse-patient ratios to no effect; in the worst of times we supported the first $10 billion installment on a fast train between the Bay Area and Los Angeles. (To put this amount into perspective, the voters will soon be asked to approve an $11 billion bond to resolve a decades-long survival dispute between cities, farmers, and salmon.) And on and on. In their wisdom, the Founding Fathers designed a Republic with responsible elected officials making decisions which required prioritization and connected the policy with the financing. In California, "we, the people" decide on what feels good at the moment.  

- Insatiability is a national problem as well. Some improvements can be made by just being smarter - drastically reducing the prison population in California, for example - but in the end there have to be limits and trade-offs. This is sometimes described as a choice between the "nice to have's" and the "must have's". A better prism for the coming more difficult times is a choice between consumption (such as health care) or investment (such as education or infrastructure). This also becomes a generational question - the country will be much better off if it takes quality k-12 education over free health care for the Boomers.

Maybe the protesting students in Berkeley will eventually connect the dots.

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This week's "bonus" is an excellent article from Britain's Mail in which several prominent scientists discuss the global cold period of up to 20 or 30 years which will result from deep ocean temperature patterns. Lets see how many grants they get to support their work.

And a brief mention of the election for "Ted Kennedy's seat" is in order. If you live in Massachusetts, please vote; if you have friends or relatives there, please contact them. The best discussion is in the reader comments to a blathering op-ed in the leftist Boston Globe - all favoring Scott Brown. (Forget the propaganda, click on the comments.)  

bill bowen - 1/15/10 

    

Comments

[William McCormick]

Hold on to your wallet--here comes the smoke: Harry Reid says the Senate will not vote until Brown is seated. Gibbs says no big deal "we knew Americans were unhappy with the (Bush) recession." Pelosi says "full speed ahead with healthcare". Then one of the House Democrats says we are now going to go home and listen to the voters. Obama forms the bipartisan commission--Obama--bipartisan? Then, probably after listening to the laughter on their circular logic of "the Massachusettes voters were sending a message about their anger with 8 years of GWB", Obama says "I think we should just go ahead and pass the parts of the healthcare plan we can agree on." Which of those strategies will actually be employed? Stay tuned. Where there's smoke there's fire.

[William McCormick]

I'm watching the gut wrenching excuses and blame game going on in Washington with interest. They still don't "get it". Obama has no intention of ever doing what the voters want. He is simply talking and sending out the mouthpieces to talk about the message they heard. They think it's about the economy. They think it's about unfair contracts for companies who are tax delinquent. They think it's about Wall Street. Wrong. It's about the attempt to change America by restructuring it. It's about the Trillions of dollars of debt. It's about the failure to address the real problems of America and instead trying to enlarge government and the role it plays in our lives. It's about the unethical bribery used to pass unpopular programs. It'a about the arrogant approach to pushing solutions that cost Americans jobs with increased costs and taxes. It's about doing what Americans don't want despite their protests like giving terrorists their rights and putting them on trial in public places. Obama and his administration think they know better than the American people what they need. They found out in Virginia, New Jersey and again yesterday that they are wrong. But they won't stop--they'll just blow a little smoke our way, make some pretty speeches and keep going. Until November, that is, and then a lot of them will go home. But in the meantime expect to see a subtle rebellion in the Democratic party by those who do "get it."

[William McCormick]

And now the analysis begins: What did this historic vote mean and why did it happen? You don't have to go any further than watch the President's press secretary this afternoon, long before the polls closed in Massachusettes, begin the smoke and mirrors performance. Incredibly, this vote against Democrats in which 22% of democrats and nearly 65% of Independents voted for Brown was the fault of George W Bush. Yep, they are so angry about the economy that Obama inherited that they voted Obama's candidate down and the Republican in. Huh? How arrogant are they? How stupid do they think Americans are? Every move they make is deception. Every promise they make they break. Everything that happens they have an excuse for. They are losers and they are losing. Acorn was the beginning of the disclosure. The pork bill labeled stimulus further opened eyes. The Louisiana payoff showed people the way they operate. In mid December the Democrat was ahead of Brown by 19%. Then, came the Nebraska purchase and the gig was up. Now Americans know exactly what they are facing and many, independents and Democrats have had enough of the smoke and mirrors government. Obama will begin with his State of the Union speech to continue the smoke and mirrors campaign against their opponents and GWB. The parade of social programs and trickery will continue as Obama tries to implement his social agenda. But the door is closed as more and more Democrats will separate from him before November arrives. Already some down 15% in the polls are retiring. America is an amazing country--no wonder we can fight a recession, two wars and save Haitians without even pausing to question. With America it is: "of course we can".

Only in America can the ACLU demand the Defense department turn over the targeting and command and control rules for the drones fighting the war against terror. Who would ever want to experiment with liberalism again?

[William McCormick]

Hey maybe we have one who "get's it"! The new Governor of Virginia after calling for offshore drilling, then called for the sale of the state owned liquor stores to get virginia out of the private enterprise business. And, immediately following called for the legislature to clear away much of the redtape required to start a new business in Virginia vowing to make Virginia the easiest state in the union to start a small business in. So far in one day on the job his governor is the opposite of everything the Obama administration represents. The calvary may have arrived in at least one state. Good luck, Gov.

[William McCormick]

History teaches us many lessons. The last time we needed some common sense we elected Ronald Reagan. Here's his voice from the past reminding us why:

'It has been said that politics is the second oldest profession. I have learned that it bears a striking resemblance to the first.'- Ronald Reagan Remind you of the Nebraska deal?

'Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it'
- Ronald Reagan
Remind you of this Administrtion?
.

[William McCormick]

Imagine this, Bo. And call the Govinator. The new Governor of Virginia, a Republican, on his FIRST day in office and facing a $6B budget shortfall called for Virginia to be the first east coast state to begin offshore OIL DRILLING. California has CAPPED wells offshore ready to reopen and tap one of the largest known oil fields in the world. But they'd rather go broke. The difference between Republicans and Democrats--capitalistic solutions to problems.

[William McCormick]

Hi Tom, Great to see your thoughts. Keep em coming. I'll let Bo respond to the No child left behind comment. He's the education expert. Tomorrow night our county school board will explain their thoughts on how to handle a masive $14M shortage in this years budget. The state has just given $25M to fund the intial phase of a $150m waterpark with their stimulus money. Without a clue where the rest of the money will come from. Members of the county executive branch of the school system make in excess of $250k each. More than the Secretary of Defense. Make any sense? I say give the whole system to the Catholic Church and they'll run the schools, improve the education of the children and probably give the county back a refund.

[Tom Thompson]

Good article Bo. Really got jazzed on the global cooling article. For a while, I thought I had lost you on this one. Good response Mac.You have O'b pegged.

Having lived all over California, I know the State well and I questioned Bill B's sanity in moving to a place he had never lived. Why don't you give it up and move to North Carolina Bo?

One complaint: I do not in any way endorse No Child Left Behind nor any attempt to modify it to make it palatable. What gives the federal Government any Constitutional authority to set educational standards let alone fund the 'winners'? I am dismayed that a Republican president took this initiative. The framers of the Constitution knew exactly what they were doing. By reserving all 'other' powers to the States, they demonstrated a healthy disrespect for centralized power unless there was a compelling reason for doing so.

[William McCormick]

Last night OReilly said that conservatives on the internet who were criticizing Obama for being late in his to response were wrong and that the focus should be on his helping the people of Haiti. The point here Mr. OReilly is not to criticize his help of the people of Haiti. As all Americans know: every President and all of the American people will, in the middle of a severe recession, respond-- as we always do-- to help the people of Haiti. The point is the hypocracy of the way the President approaches every crisis as a photo op and campaign opportunity for himself. He first pointed to the Bush failures in response to Katrina then days later appoints Bill Clinton and GEORGE W BUSH to raise money for the Haitian operation. Bill Clinton is the United Nations head guy for the operation and within hours of the quake was raising funds for Haiti. And, asking GW who will likely jump into the role like his father, is pure politics trying to erase the disdain he has shown for everything GWB did as president. This is the hypocracy of it all. Meanwhile during this crisis he spent 15 hours behind closed doors with Pelosi, Reid and the labor union leaders of America trying to craft a healthcare bill that will pass his OWN party finally using the Nebraska-Louisiana method to buy them off. AND, he taped a weak TV ad for the people of Masssachusettes beggin them not to allow the Republicans to keep "Martha" from getting Ted's seat. That's it, Bill, that's why this man takes heat. God Bless those people of Haiti. We'll send our money through the Clinton-Bush fund. Did you know that the US has spent $3B in Haiti in the last 20 years?

Let's look at the other countries of the world:

China gave $5M. Venezuela sent one plane of relief supplies. Saudi Arabia not a dime. Russia has sent two rescue teams. Need I go on?
The "GREAT SATAN" of the world, America, is alone once again.

[William McCormick]

President Obama has just issued a statement that the Dems are close to having the Healthcare bill ready for vote and has urged the Dems to carry it home. He calims it will help them in the November election with "if the Republicans want to campaign against what we've done -let them". Healthcare is just one item that will be debated all the way to this election. He must be worried about the vote to issue that reinforcing message.