California Is Going Under

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WheelsRCool

Main Question or Discussion Point

http://www.nytimes.com/2009/05/22/opinion/22mathews.html?_r=2&ref=opinion

http://online.wsj.com/article/SB124260067214828295.html

As I see it, California is the prime example of what a failure the policies of the Left are (whether followed by Democrats or Republicans). Considering the policies that wrecked California (massive social spending, high taxes, heavy regulation, environmental regulations, etc...) are what Barack Obama and the Democrats ran on, everyone needs to pay very close attention to California as this administration seems hellbent on applying these same policies on the national level, and California is the world's 7th largest economy, and once the greatest state in this nation.

The taxpayers should not have to bailout California, but if California goes under, so will the nation I think. It's just too big. But the Leftist government there, and the special interests there, namely the unions, trial laywers, and environmental whackjobs, have killed the goose that lays the golden eggs.

The Left may like to try the claim that this financial crises on Wall Street somehow "proves" that the Republican "model" (which the Republicans themselves haven't per se followed 100% as of late) doesn't work or whatnot, but the real proof of what works and doesn't lies with the states and cities.

The same thing happened to the nation's greatest city, New York City, in the 1970s. No city followed more policies of rent and price controls, high taxes, big government, a huge budget and massive spending on entitlements and social programs.

John Kenneth Galbraith once wrote an article for the Times in the 50s asserting that if only the city's budget was twice was it was at the time, all the city's problems could be fixed. Well by the '70s, the budget was more than tripled and the city was a crime and poverty-infested, bankrupted hellhole, in which the state of New York and the federal government had to literally bail it out.

NYC has a welfare state within the welfare state to this day.

Now California, the world's 7th largest economy and our greatest state, once reknowned for having the greatest infrastructure, the best schools, the best students, and the greatest economy in the nation, has been driven straight into the ground, through policies of massive entitlement spending, incredibly strong unions, insanely stringent regulations, an environment outright hostile to business and free enterprise, out-of-control speniding, and so forth.

California, New York state, New Jersey, and so forth, are also proof that raising taxes, even when it increases revenues, rarely closes the budget, because then the special interests (which grow as the government grows, because the more government tries to regulate industry, the more industry tries to regulate the government) demand more and more money and the government decides to just spend more and more.

What states have the highest taxes in the country? California, New York, New Jersey, etc...what states have the biggest budget deficits, AGAIN, California, New York, New Jersey. Here in Upstate NY where I am, they have run commercials talking about how to fix the state's budget problems as so many businesses and wealthy individuals are leaving the state.

This creates a vicious cycle, as taxes go too high, more and more businesses and people leave, resulting in taxes having to go even higher, and so on.

The great irony is this administration will have to bail out the state that has gone down the toilet while at the same time seeking to apply the same policies on the national level (they are going to have to raise taxes significantly to pay for the massive spending of universal healthcare and whatever else they create, then there's carbon cap-and-trade they will try (General Electric, which is in bed with this administration, is hell-bent on having universal healthcare and carbon caps passed), union card check, etc...).

Another example of a country headed this way is the United Kingdom under Labour party, which first drove the UK into the ground by the 1970s, then the conservatives won power, fixed things, then grew corrupted like the Republicans did, lost power, Labour made a comeback as "New Labour," and "New Labour" has since gone on to enact the same old tired policies of massive spending, thus so mis-handling the nation's finances that it will be an enormous shock if they do not lose in the next election.
 

Answers and Replies

  • #2
Ivan Seeking
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From the WSJ link

With states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich.
No doubt that WSJ has fallen far under Murdoch - the Fox Newspaper!

Or is that supposed to be considered balanced journalism? [If you think the answer is yes, you have been watching Fox too long]
 
  • #3
Ivan Seeking
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It sounds to me like the problem is the voters.

That measure would place strict limits on future state spending and boost the size of the state's reserves, in addition to extending the recent tax hikes. But only 35% of likely voters say they'll back it.

This is the second time in recent years that spending restraints are coming before voters.

Californians rejected the "Live Within Our Means Act" that Schwarzenegger championed in the 2005 special election he called. Meanwhile, only 40% back Proposition 1B, the measure supported by the California Teachers Assn. that would require $9.3 billion in funding for education over the next half-dozen years. It would take effect only if 1A also passed.

The proposal that promises to provide the state with the most financial help, Proposition 1C, is faring worse than the others. It would allow officials to borrow $5 billion against a revamped state lottery. Only 32% of likely voters say they support it.

Proposition 1D, an effort to divert $1.7 billion over the next five years from a voter-approved childhood development program, is running neck-and-neck among likely voters, with the backing of 43%...
They want the perks but they don't want to pay for them.
 
  • #4
Pengwuino
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It sounds to me like the problem is the voters.
The best part is we paid $110 million or so to run the election so that almost everything could be rejected anyways :rofl: :rofl: :rofl: I need to get out of this state.

Oh and there was like, 10% turnout?
 
  • #5
I believe that the problem is not with the projects and social programs themselves but with the fiscal irresposibility of the state government. While this is certainly a contributing factor I think that current issues are more to blame for the revenue crisis. Realestate is a big industry in California that as we all know just took a huge hit. The recent screen writers guild strike and threat of a screen actors guild strike have also had major impacts on the economy since entertainment is a large money maker for the state. I believe I heard that last year only seven movies were made here as compared to over a hundred the year before. Approximately 75% of the car dealerships in the state are expected to be closed down or go under. Californians love thier cars but lately are not buying. And then there are the ports which are going to be hard hit when ever you see major import/export industries getting hard hit.

It sounds to me like the problem is the voters.

They want the perks but they don't want to pay for them.
An uninformed electorate are certainly partly responsible. But the aforemention fiscal irresponsibility plays into this in a major way. ALL of the initiatives on the last ballot were passed, including many with major spending attached. The thing is that the government had no way of paying for these things. Its typical of the California government to spend money they do not have. They spend and then look for new ways to tax its citizens to fund the projects after the fact. If the voters knew that these projects they were voting on were going to mean more and higher taxes they would be less likely to vote for them but I guess most people figure that you don't plan to spend money when you don't know where you're going to get it from and assume that the people pushing these initiatives know better than they do what we can afford.
This last vote actually highlights the uninformed voter problem. Only 23% (if I remember correctly) of registered voters turned out. Most likely they are the only ones who understood or even cared what it was all about. For the most part these measures were all means of passing the burden of the governments fiscal irresponsibility onto the citizens. They (the people who ought to know better than we do) can't decide how to balance their budget and are asking the voters to accept the responsibility of fixing this.
 
  • #6
cristo
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It sounds to me like the problem is the voters.
I don't get why you would vote for laws anyway: don't you vote for politicians to decide the laws?
 
  • #7
I don't get why you would vote for laws anyway: don't you vote for politicians to decide the laws?
It depends. Certain laws require a vote and other times the legislators can not decide amongst themselves and so place it before the people to vote on.
As I mentioned, in the case of this most recent vote, all of the items on the ballot were for the purpose of getting voters to decide on what the legislators could not. I believe some decisions on taxes also require a vote according to California law.
The radio hosts I listen to have been urging voters to oust the politicians who were impotent in resolving the current fiscal problems.
 
  • #8
russ_watters
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From the WSJ link

No doubt that WSJ has fallen far under Murdoch - the Fox Newspaper!

Or is that supposed to be considered balanced journalism? [If you think the answer is yes, you have been watching Fox too long]
Yes, the WSJ leans to the right. So what? You're just noticing what republicans notice about other news sources all the time. Get over it.

Tone aside, is there anything in that quote that is incorrect? That is Obama's plan, is it not? Massive deficit spending followed by huge tax increases for the rich (and a great many people will be dismayed at being considered rich...)?
 
  • #9
russ_watters
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It sounds to me like the problem is the voters.

They want the perks but they don't want to pay for them.
Agreed. And it is the same nationally. Obama's campaign promises were not just planless (close gitmo), they were mathematical impossibilities (spending that only half makes it to the debt).

Now nationally, that's only half the fault of the votors for being naive and selfish - it is also half Bush's fault.
 
  • #10
russ_watters
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I don't get why you would vote for laws anyway: don't you vote for politicians to decide the laws?
I agree that it tends to defeat the purpose of a representative democracy. The entire point of such a government is that you pick leaders with good judgement and then the leaders make decisions based on what is right, even if it isn't necessarily popular. Unfortunately, in practice, in the modern age, in the West, that isn't the way it works.

In the 1800s, it wasn't possible to have a direct democracy because it wasn't possible to communicate over long distances, in real time. Politicians could therefore make decisions based on their conscience, not based on direct polling of the electorate. Sure, they'd have to answer for their actions, but at least they would be their actions. Over the past 20 years, in the US, our government has become an almost fully direct democracy - virtually nothing (big exception: the bailouts) is done without prior opinion polling of the electorate. It is a very bad thing.
 
  • #11
cristo
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I believe some decisions on taxes also require a vote according to California law.
That's the most idiotic thing of all! Given a vote on the question "would you like to pay more taxes?" how many people do you think would answer yes?!
 
  • #12
That's the most idiotic thing of all! Given a vote on the question "would you like to pay more taxes?" how many people do you think would answer yes?!
I think it depends on the size and type of the tax increase essentially insuring against the legislators taxing their citizens into the ground at one go. The tax increases proposed in these measures would have constituted the biggest tax increase in the history of the state, approximately 7 billion all tallied up.
Similarly the legislators need a full two thirds majority to make major tax increases that are within their power. The democrats in the legislature actually tried to bypass this earlier in the year by calling the taxes "fees" so that they would only need a simple majority instead of two thirds.
 
  • #13
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That's the most idiotic thing of all! Given a vote on the question "would you like to pay more taxes?" how many people do you think would answer yes?!
Last referendum we voted on just that. It passed.
 
  • #14
russ_watters
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I've voted for (and seen passed) things like 'would you support paying an additional $5 a month in taxes for the local fire department to buy a new fire truck'.

They have to be packaged properly, for sure.
 
  • #15
Hans de Vries
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No doubt that WSJ has fallen far under Murdoch - the Fox Newspaper!

Or is that supposed to be considered balanced journalism? [If you think the answer is yes, you have been watching Fox too long]

Foxnews uses the freak-news-strategy, much like it's Russian
conservative look-alike the Pravda.

http://english.pravda.ru/

This is a very deliberate conservative media strategy. Most of the
front page is freak news. The readers get convinced the world is
freaking nuts, after all: Conservatism = Lack of confidence in your
fellow humans. What else is better to get people "conservative"?

You see the results in the desperate ramblings....


Regards, Hans
 
  • #16
Ivan Seeking
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I don't get why you would vote for laws anyway: don't you vote for politicians to decide the laws?
One can always get an initiative on the ballot by getting enough signatures showing support for it. It is a mechanism intended to bypass the legislature and give the voters the final say; provided that the law is Constitutional and isn't rejected by the courts. For example, this was how California passed the now infamous proposition 13, which put strict limits on property taxes.

Also, voters do often approve an increase in taxes in support of a particular cause or action. In the voting pamphlet that we get before each election, the pro and cons of each measure are presented by both sides along with the impact on taxes.
 
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  • #17
Gokul43201
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As I see it, California is the prime example of what a failure the policies of the Left are (whether followed by Democrats or Republicans).
If you wish to use the state of debt as the only measure of the success or failure of the policymakers in place, you've only got to look at this:

http://zfacts.com/metaPage/lib/National-Debt-GDP.gif
http://zfacts.com/p/318.html

Despite the "massive entitlement spending, incredibly strong unions, insanely stringent regulations, an environment outright hostile to business and free enterprise, out-of-control spending" and the "massive social spending, high taxes, heavy regulation, environmental regulations, etc.", California's Real GDP has been among the fastest growing over the last decade, increasing by 49% from 1997 to 2007 (longest period available at BEA), compared to the US Real GDP, which grew by 37% over that same period.

http://www.bea.gov/regional/gdpmap/GDPMap.aspx [Broken]
US GDP

CA may be in a pickle right now with the budget gap (and some other issues), but in terms of overall economic health, they've been doing a little better than one might think, reading the OP.

PS: GDP growth for NY has been 41% over the last decade, also above the national average.
 
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  • #18
misgfool
What is the status of the California bailout?
 
  • #19
What is the status of the California bailout?
....
Asked about the financial crisis in California, Obama said he did not believe the federal government would provide a bailout, though he acknowledged the state faced "some very difficult choices."

He said his administration would try to help California and other states overcome "uncertainty and anxiety in the credit markets" so they could continue to issue bonds to renew outstanding debt.

"We are talking to state treasurers across the country, including California, to figure out, are there some creative ways that we can just help them get through some of these difficult times," Obama said.
cont...
The problem is that if Obama makes a large monetary commitment to CA all of the other states will scramble to get in line for theirs. Its just not a very good idea.
 
  • #20
If you wish to use the state of debt as the only measure of the success or failure of the policymakers in place, you've only got to look at this:

http://zfacts.com/metaPage/lib/National-Debt-GDP.gif
http://zfacts.com/p/318.html

Despite the "massive entitlement spending, incredibly strong unions, insanely stringent regulations, an environment outright hostile to business and free enterprise, out-of-control spending" and the "massive social spending, high taxes, heavy regulation, environmental regulations, etc.", California's Real GDP has been among the fastest growing over the last decade, increasing by 49% from 1997 to 2007 (longest period available at BEA), compared to the US Real GDP, which grew by 37% over that same period.

http://www.bea.gov/regional/gdpmap/GDPMap.aspx [Broken]
US GDP

CA may be in a pickle right now with the budget gap (and some other issues), but in terms of overall economic health, they've been doing a little better than one might think, reading the OP.

PS: GDP growth for NY has been 41% over the last decade, also above the national average.
Great... but how much of that has been absolute BS growth based on no true value added to the economy... just debtor spending..
 
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