March 13, 2012

Golden State Gloom

For a number of years, California has maintained its reputation as a “cutting edge” state, the incubator of grandiose ideas that eventually find their way to the more “benighted” regions of the country. California is indeed ahead of the curve in that it offers a compelling look at where unfettered progressivism in all its destructive glory eventually leads. It is a destructiveness the Obama administration aims to impose on the rest of the nation should the president win re-election in 2012.

For a look at America under a second Obama term, look to withering California.

For a number of years, California has maintained its reputation as a “cutting edge” state, the incubator of grandiose ideas that eventually find their way to the more “benighted” regions of the country. California is indeed ahead of the curve in that it offers a compelling look at where unfettered progressivism in all its destructive glory eventually leads. It is a destructiveness the Obama administration aims to impose on the rest of the nation should the president win re-election in 2012.

The 2010 election was essentially a repudiation of Democrats and the Obama administration in virtually every state across the nation – save California. While 63 seats in the House of Representatives changed hands from Democrats to Republicans, not even one Democrat incumbent from California lost a seat. Democrat Jerry Brown was elected Governor and Sen. Barbara Boxer was re-elected to the Senate. Leftists were ecstatic. “California held on last night against the Republican rager that swept the nation," wrote Mother Jones’ Josh Harkinson. Huffington Post’s Phil Trounstine and Jerry Roberts noted that the "raging red wave that swept across the country” didn’t reach the Golden State.

Jennifer Jones was far less optimistic – and far more accurate. “California seems determined to pursue liberal statism to its logical conclusion (bankruptcy),” she wrote for Commentary Magazine.

Technically speaking states cannot go bankrupt. But they can run out of money, precisely like California is – again. In 2009, facing a staggering budget shortfall of $26 billion, the state was forced to issue IOUs to many of its creditors and furlough state employees. Last month, CA state Controller John Chiang notified the legislature that the state will run out of money sometime in March, unless $3 billion in cuts or revenues can be found to keep the state solvent for fiscal year that ends in June. Next year looks even worse, with the state facing a deficit of $6.6 billion.

Cities are a different story. They can go bankrupt, and Stockton, CA is on the brink. Mayor Ann Johnston expresses the essence of progressive “logic” that brought this city of nearly 300,00 people to its knees. “When we went on a real spending spree and built the arena, the ballpark, a lot of community infrastructure – did a whole lot of things to improve the community that were bonded,” she says. “I mean, these were all financed through municipal bonds.” That would be $300 million worth of bonds fueled by a real estate boom “city leaders thought…was going to continue forever,” Johnston added.

As for public service employees, Stockton is a microcosm. Pay raises and enhanced benefit packages for police and firemen became the order of the day. City Manager Bob Deis says Stockton is currently facing a $20 million deficit in a $160 million budget. Yet those numbers pale in comparison to the far bigger problem “Right now, we have an unfunded liability in the retiree health program around $450 million,” said Deis. Stockton would be the largest city in America to go bankrupt. Yet they are not alone. The northern California cities of Hercules and Lincoln, are attempting to restructure their debt and cut employee costs to forestall insolvency, and municipal finances in San Jose and San Diego are also reaching unsustainable levels, driven by the same public employee pension debt and healthcare costs strangling municipalities across the entire state.

Yet progressive arrogance and denial run deep. Even modest pension reforms proposed by Gov. Brown are going nowhere in the Democratically-dominated state legislature, and Democratic Sacramento Assemblyman Roger Dickinson has actually introduced a Public Employees Bill of Rights protecting the status quo of union largess. How tough it is for public employees? 15,000 California government retirees have pensions greater than $100,000 per year, and 1332 public sector employees currently make over $150,000 per year. And lest anyone think Gov. Jerry Brown is the voice of reason, think again: he and his fellow Democrats in the state legislature continue to support a high-speed rail project connecting Los Angeles and San Francisco whose cost estimates have exploded from between $40-$45 billion two years ago to $98.5-$117.6 billion – before the first piece of track has been laid down.

California’s solutions? Like all good progressives, Brown has proposed "tax the rich" increases in California’s seven income tax brackets that currently begin at 9.3 percent for people making $47,056 a year, up to 10.3 percent for people with incomes over a million dollars. Brown wants to raise the latter figure to 12.3 percent on everyone making $250,000 or more. The governor insists on these increases even though the top one percent of California earners currently pay 50 percent of the state’s income tax. He also wants to raise state sales taxes (which vary by county) up to a range of 7.75 percent to 10 percent. All of these proposals will be on the 2012 ballot.

Yet even as California remains mired in the economic doldrums, it remains wedded to progressive notions regarding illegal immigration. Notions which, for all intents and purposes, amount to de facto amnesty. Again, one might think the insanity of tolerating millions of illegals reached its zenith late year when the state approved taxpayer-funded college scholarships for illegal aliens, which dovetails quite nicely with the sanctuary city policy at work in several of that state’s largest municipalities, including Los Angeles and San Francisco. Yet again, one would be wrong: Democrat State Assemblyman Felipe Fuentes has proposed an initiative that would bar deportation of illegals from California. Both policies are in clear violation of federal law, but the same U.S. Justice Department currently suing four states for such violations when they work against the interests of illegals, continues to turn a blind eye toward progressive-inspired violations that give illegals free reign.

As one might suspect, progressive policies have predictable results with respect to unemployment as well. California’s rate just dropped below 11 percent for the first time in three years, but that is only part of the story. Entire counties in that state have unemployment levels far higher, including Fresno County at 16.9 percent, Merced County at 19.5 percent, Tulare County at 17.3 percent, Madera County at 15.1 percent, and Kings County at 16.9 percent. All of them pale in comparison to Colusa County, where the unemployment rate is 27 percent.

Aiding and abetting California’s economic woes is the progressive infatuation with radical environmentalism. In 2006 the state has passed AB32 requiring a cap-and-trade reduction in global warming emissions to 1990 levels by 2020. It kicks in this year. Yet that nuttiness pales in comparison to the intentional destruction of farms in the San Joaquin valley in order to save a fish known as the Delta smelt under the auspices of the Endangered Species Act. San Joaquin once produced half the fruits and vegetables consumed by the entire nation with $26 billion in annual sales. And despite the attempt by Rep. Devin Nunes (R-CA) to undo the damage with congressional legislation, the Obama administration has signaled it will veto the bill because it would “unravel decades of work” on California water regulations. Work that has turned America’s most bountiful county into a dust bowl.

Unsurprisingly, all of the above has contributed to an exodus of businesses leaving the state. Since 2007, more than 2,500 employers have left, taking approximately 109,000 jobs with them. And the trend is accelerating: 26 percent more companies left the state in 2011 compared to 2010, further burnishing California’s dubious distinction as the state that lost both the most jobs and the most firms during the recession. Even crony capitalist “winner” Solyndra went bankrupt in a state that worships mindless environmentalism.

And so it goes. A state dominated by Democratic politicians in thrall to government unions, who long ago past the tipping point where they could ram their interests through the legislature against the public will, is reaching critical mass. Unfunded liabilities for public worker pension alone are more than $500 billion, according to a study by Stanford Institute for Economic Policy Research. Productive people are leaving the state in droves as an unfriendly business climate and radical environmentalism drive them to greener pastures.

In short, California is looking more and more like Greece, which despite all rhetoric to the contrary about being “saved” by a bailout, has triggered $3.1 billion in credit default swaps (CDS), coining a new term in the process known “restricted default.” Keep in mind that Greece’s economy is the size of Rhode Island’s. California’s economy? In 1999, it was the sixth largest in the world. In 2007, it was eighth. In 2011 it was ninth.

Does anyone seriously believe a world mired in recession for three-plus years, including an entire continent of Europe beset by an existential debt crisis, is catching up? Hardly. California is sinking into a progressive swamp entirely of its own making. The very same progressive ideology president Barack Obama and his party are endeavoring to inflict on the rest of the nation.

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