State, US have same problems
March 3, 2010 9:00 p.m.
Barack Obama may be the best president of the United States that California could have ever asked for.
Here is why: As he pursues liberal policies that raise our debt, entrench unemployment and take bigger and bigger chunks out of people’s earnings, the citizens of California may come to realize that what’s not working for the country will not work for their state either.
At the same time, Californians will begin to feel the heat when the other seven-eighths of the nation’s population begins to complain that the Golden State is prolonging the country’s recessionary woes by kowtowing to unions and the legislators who serve them.
Perhaps because people recognize the implications for the rest of the country, California’s problems have been a source of national alarm for many years. News of our $42 billion budget shortfall reached the other end of the country as soon as it hit here.
Reasonable people know that something is awry. They hear the talk about bankruptcy, see our taxes reaching epic proportions, and watch students from UCLA and UC Berkeley march in quads brandishing signs demanding “budget transparency.”
Poke any area of California, and you will find it hurting. In education, the fiscal crisis forced dramatic cuts to state schools’ budgets, which angered the unions, and increased student fees, which angered the students. These sad but necessary policies have led to another consequence: greater cooperation between the two dissatisfied groups (unions and students).
Their demands for more services and more pay show little respect for the concept of a “budget crisis” and only make it harder for universities to run themselves. These demands are even harder to square with considering that our student fees still pale in comparison with that of our competitors, such as Stanford, which pays upward of 70 percent what we pay.
On immigration, California has been whipsawed by an influx of poverty from our southern border and the departure of labor and businesses to other states (more fodder for the welfare state). This vicious cycle is driven by the state’s antediluvian tax code, which soaks the wealthy to fund the entitlement benefits it bestows on the remainder of the population.
In 2006, the top 1 percent of wage earners in California paid more than 40 percent of the tax burden, while the bottom 50 percent paid less than 3 percent, according to the Tax Foundation’s Web site. The only comparable distribution is in New York, the other entitlement-addicted state.
Tragically, California’s perennially Democratic Legislature is angling at raising taxes even higher to fill our sinkhole ““ a sinkhole it created by 20 years’ worth of budgeting spending increases far out of line with inflation and population. (Never mind that our personal income tax, sales tax and corporate tax would already make most other states blush.)
If the Legislature does raise taxes, our suffering economy will suffer more. Discovering the more propitious tax policies in other states, businesses and individuals will relocate, depriving the state of revenue. Those who do not flee will begin working in ways that prevent them from being poleaxed by the tax regime (e.g., working more at home). Either way, they supply the impetus for legislators to find more creative ways to dig for money.
The same thing is happening on the national level. Despite ballooning budget deficits (which will only get bigger if a health bill passes), Congress continues to spend its heart out, including extending unemployment benefits and converting once “discretionary” programs, like Pell Grant, into permanent monuments of the welfare state. To cover these outlays, it intends to raise taxes on the top bracket of earners.
Besides their methods of problem-solving, California and Washington, D.C., also have similar styles of leadership. Both have legislative bodies that are controlled by Democratic majorities, and both are very unpopular. The approval rating of California’s Legislature is at 16 percent, according to The New York Times, while the approval rating of Congress is at 18 percent, according to a February Gallup poll.
The executives of these regions have even more in common. The platform Obama ran on ““ summarized by the politics of “hope” and “change” ““ was presaged by Gov. Arnold Schwarzenegger when he ran for his first term in 2003.
Schwarzenegger back then used many of the same slogans that people found so novel in 2008, such as transparency, cutting government spending, standing up to “special interests” and restoring faith in politics. As it turned out, neither one kept his promises, and both now have approval ratings hovering around dangerous lows.
Finding such similar circumstances in Sacramento and Washington, one wonders if voters will respond in similar ways when the time comes to render a decision on who stays and who goes. While Schwarzenegger is shielded from electoral retribution by California’s term limits, this still leaves open the question of who will take over when he leaves.
If the Obama-Schwarzenegger connection is valid, it’s likely that voters will make California’s gubernatorial election a referendum on Obama’s agenda.
If the public’s current displeasure with that agenda holds, we could be in for a cultural shift in this state, which would serve as an ill omen for Democrats entering the 2012 presidential election. That is, unless Obama decides to pre-empt such an outcome by bailing us out ““ or, bailing out the unions and demanding tribute in the form of pro-Democratic election results.
Even then, it’s only a matter of time before people realize that what’s sinking the country is also sinking California. When that happens, it could trigger a backlash strong enough to break the network of politicians who have held us at the mercy of unions and impeded progress for so long.
Who would have thought in this environment that Obama and the Legislature would be California’s best hope of overturning the entitlement culture and fixing the grave fiscal, education and immigration problems that are such a bane to our existence?