Custom Search

Wednesday, November 14, 2012

Reason's Matt Welch: 'I Might Dislike The GOP', But Look At What Democrats Have Done In Bankrupt California

By Susan Duclos

Reason's Matt Welch  lays out  the fiscal facts of a bankrupt California and who has controlled the state as drove it right into the ditch.

I might dislike the state GOP even more than Harold Meyerson does, but there are some other numbers that prevent me from celebrating what Meyerson hails as "the political transformation of California." For instance:

* Democrats have controlled all eight statewide executive offices since 2011, for only the second time since the 19th century.

* Democrats have a 28-12 edge in the state Senate, tied for its largest advantage since the 19th century. The party has held a majority there since the late 1950s.

* Democrats have a 54-26 edge in the state Assembly, its largest advantage since 1978. The party has run the Assembly since 1997.

* California has been represented in the U.S. Senate by Dianne Feinstein and Barbara Boxer for two decades.

* That 38-15 congressional delegation advantage, if it indeed holds, will be by far the largest spread in state history, and almost the largest percentage advantage as well (there was that 3-1 moment in the 1870s). Republicans last held more California congressional seats than Democrats in the late 1950s.

Welch then goes on to report what "all this enlightened Democratic governance produced."

 The last month that California had an unemployment rate of less than 10% was January 2009. The last month its unemployment was lower than the national rate was April 1990. The 2010 Census marked the first time California didn't gain a seat in the House of Representatives since basically ever. For the first time since the Gold Rush, a majority of California residents were born in the state. The ultimate migration-magnet in a nation of immigrants is just no longer so, however strange that may be to accept.

We cannot blame this all on professional Democrats or even their public-sector union overlords, of course; the populace itself deserves more than its fair share of discredit. But it is worth noting that as the ship of Golden State was being driven straight into the ditch, it was precisely the likes of Harold Meyerson who had the temerity to blame what few elected Republicans there were for throwing a few grains of sand into the overwhelmingly Democratic state machinery.

Well, that excuse is gone, as Scott Shackford pointed out after election day. From this month forward, let us gaze upon California for what it is: a living, wheezing example of unfettered Democratic governance. Progressives should be tickled pink about having such a nice, big demonstration project from which to showcase their superior economic philosophy. And the rest of us should grab popcorn.

In July 2012 it was reported that city after city in California started declaring bankruptcy, their tax and spend policies unsustainable. In August, credit agencies, Fitch Ratings and Moody's both reported they anticipate "more bankruptcy filings and bond defaults among California cities" and is considering "across the board adjustments of debt ratings for California cities to reflect the new fiscal realities and the governmental practices in addressing them."

In 2011, 254 businesses left California. 202 left in 2010, 51 in 2009.

From March 2011, Robert Franks at WSJ, shows the correlation between becoming overly dependent on the "rich" for taxes to sustain a state or government and the largest budget holes across the country.

Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them.

Mr. Williams, a former economic forecaster for the state, spent more than a decade warning state leaders about California's over-dependence on the rich. "We created a revenue cliff," he said. "We built a large part of our government on the state's most unstable income group."

New York, New Jersey, Connecticut and Illinois—states that are the most heavily reliant on the taxes of the wealthy—are now among those with the biggest budget holes. A large population of rich residents was a blessing during the boom, showering states with billions in tax revenue. But it became a curse as their incomes collapsed with financial markets.

So, when we see Barack Obama refuse the offer of hundreds of billions of dollars in new revenue so he can continue with his "tax the rich" scheme, what it portends if Republicans in the House of Representatives let him get away with it, is for America to follow California, right into bankruptcy.