Saturday, April 6, 2013

Big Government and High Taxes Definitely Didn't "Save" California

Big Government and High Taxes Definitely Didn't "Save" California:
SACRAMENTO – Ever since
California’s voters approved the Prop. 30 sales- and income-tax
increase on the November ballot, liberal commentators have been
gloating about the resurgence of the Golden State after many years
of predicted doom and gloom. Their evidence: Higher taxes seem to
have cleared up the state’s budget deficits.
As New York Times columnist Paul Krugman wrote
recently, “California isn’t a state in which liberals have run
wild; it’s a state where a liberal majority has been effectively
hamstrung by a fanatical conservative minority that, thanks to
supermajority rules, has been able to block effective
policy-making.”
Krugman blames the “radical right-wing” for California’s
problems, claims that the school system – which captures 40 percent
of the state’s general fund plus local bond initiatives – is
insufficiently funded (thanks to those evil right-wingers again)
and believes that all is well now that “Mr. Brown [is] free to push
an agenda of tax hikes and infrastructure spending … .”
It’s odd to blame Republicans in a state where they have had
only miniscule power for at least a decade and even weirder to
suggest that California’s milquetoast GOP is beholden to the
radical right. The real questions: Has California been saved? Are
higher taxes, more regulations and massive debt spending on public
works the answer for the rest of the country?
California still has a great future, but we need to be realistic
about its problems rather than embrace this “California is
resurgent” myopia from ideologues pushing a big-government, union
agenda.
For starters, California is far from being saved. All that has
happened is a temporary elimination of the deficit on paper. That
can quickly change and the state is still living off of borrowed
money. Longer term, many businesses will move. They’ll probably
leave their headquarters here because this is where the CEOs like
to live, but job growth and expansion will take place elsewhere.
That's already happening.
California’s dominant Democrats can now raise taxes, float debt
and expand government at will. Republican “obstructionism” forced
the state’s liberal leaders to control themselves, but that control
is over. Every hare-brained idea will have at a high likelihood of
passing. Democrats already are pushing a host of new taxes and
proposals that will make it easier for local officials to raise
taxes, also. So the taxing and spending has just begun.
Of course, to Krugman and other leftists, that’s the goal. As
William Anderson of Frostburg State University in Maryland writes,
“The fact that California has the highest taxes in the country, has
a virulent anti-business governmental culture, and has rules that
increase the cost of just about everything has nothing to do with
it. After all, in Wonderland, higher costs translate into more
spending, and more spending creates more wealth, so these ‘problem’
to which Krugman refers actually are opportunities for more
government spending, which means a brighter future.”
Note that these massive infrastructure projects – most of which
are needless – will saddled the state with a crazy level of
debt. Gov. Jerry Brown, who during his first time as governor
adopted a “small is beautiful” approach that halted infrastructure
projects, is now pushing obscene projects such as High Speed Rail,
which is now even opposed by the author of the rail initiative
because the project doesn’t live up to its original promise. Brown
also is pushing a Delta tunnel project – something that will cost
tens of billions of dollars to change the flow of the Delta to save
a tiny endangered baitfish known as the Delta Smelt.
Krugman skirts over the obvious bigger issues. The state’s
public schools are poor performers thanks to the lock that the
California Teachers Association has over the school system. There
used to be a time when liberal writers cared about poor kids, but
no more. They rather defend the bureaucrats and the union officials
that put their job protection above education.
Krugman claims that the right wing has invented a “new line of
attack” – i.e., claiming that “liberal big spending and overpaid
public employees were bringing on collapse.”
But look at bankrupt Stockton. That city is decrepit largely
because it spent most of its money on absurd levels of compensation
for its workers and could no longer provide crucial services.
Stockton may have taken it further than most, but it exemplifies
the situation throughout California, which faces a
half-trillion-dollar unfunded pension liability according to
Stanford (obviously run by right-wingers!).
Then there’s that little thing called freedom. California ranked
as the 49th freest state in the union in a new
Mercatus Center study. As the authors noted, “California not only
taxes and regulates its economy more than most other states, but
also aggressively interferes in the personal lives of its
citizens.”
This isn’t to say that California is hopeless. I have no
intention of leaving. But despite some good news on the revenue
front, the state has abundant problems that need to be addressed.
California may be a model for those who believe that most other
states have not sufficiently copied the unsustainable welfare-state
models of Western Europe, but it should offer warnings for everyone
else.