Saturday, January 30, 2010

Jiyza for California?

"There isn't a single compelling reason to provide the girly-man of American gubernatorial fiscal responsibility, Arnold Schwarzenegger [AS], with a nickel from our federal coffers. ... It's clearly time to start killing and slashing. For decades California has enabled its spendthrift legislators, feather-bedding public-sector employee unions and welfare recipients (comprised of both native-born and illegal immigrants) to the tune of a $21 billion annual deficit with no sign of sufficient tax revenue in sight. Meanwhile the confiscatory tax policies and unfriendly business environment of the Granola State continue to hemmorhage both businesses and jobs to more enlightened states. According to the IBD, California is home to more than 1/3 of the nation's welfare recipients. ... In addition, California is rated 48th out of the 50 states in terms of tax-competitiveness with over $493 billion worth of new tax regulations for businesses since the year 2000. Where is the light at the end of this tunnel? ... Why should we contribute to ensure expensive gold-plated retirement packages for the 'the public employee unions that have systematically looted the public' coffers of California and now come looking for more sensible Americans to fund their fiscal insanity. Let 'em hit the wall and file bankruptcy. It's time for the insolvent public sector in California to start turning away welfare recipients, closing government offices, and defaulting on public employee union benefits including pensions until they can be renegotiated in light of fiscal responsibility to all Californians, not just the special pleaders", Ralph Alter at American Thinker, 27 December 2009, link:
"The US economy survived the traumas of 2009, thanks to good policy and good luck. What worries me, looking ahead, is what might be called the 'Californiazation' of America--the growing tendency of our political system to make promises in social spending programs that it isn't prepared to pay for with tax increases. ... What's worrisome this year isn't economic decline but political dysfunction. And nowhere is that clearer than in California, where politicians--despite some serious bipartisan efforts--haven't been able to make the decisions that would put the state on a sound financial footing. The political forces that generate deficits are just too strong: a Democratic Party in hock to public-employee unions and a Republican Party in love with tax cuts. ... What many state governments want is a federal bailout, which would free them of the consequences of overspending. It's a classic case of what economists call 'moral hazard'--in that the bailouts would allow the irresponsible behavior to continue, rather than force a halt. One prominent economist argues that if the states were countries, the International Monetary Fund would grant relief only if it came with conditions that imposed fiscal discipline. So will Washington become like California? Some would argue that has already happened, with the fiscal disaster masked by the federal government's ability to sell its massive debt cheaply and print money to pay the bills", David Ignatius at Washington Post, 3 January 2010:

"Gov. [AS] of California was on the mark when he said this week that the state needed to change policies that spend more money on prisons than on the state's once-vaunted higher education systems, which are being bled to death in budget cuts. Mr. [AS] was way off the mark when he suggested that the answer was to privatize prison services or to pass yet another constitutional amendment, this time to limit prison spending. ... It would generally be impossible for the state to unilaterally lower prison spending without first cutting the prison population dramatically. ... The only real way for California to cut prison costs is to reverse sentencing policies that have filled its prisons to bursting and have driven up costs by about 50 percent over the last decade alone", NYT Editorial, 8 January 2010, link:

"Republican Gov. [AS] asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help. ... 'It's time to enact long-term reforms that will change the way the most populous state and the federal government work together,' Mr. Schwarzenegger said. He and state legislative leaders plan to visit Washington to lobby for federal bailout money. White House budget officials weren't available to comment on the governor's request. ... The governor said California deserved the federal funds because the state sends far more tax money to Washington than it receives in return. Federal mandates, he added, 'force us to spend money that we do not have,' ... Mr. Schwarzenegger called the state legislature into a special budget session. He proposed cutting $2.4 billion from health and welfare spending and $1.2 billion from prison spending. He also called for cuts in salaries and pensions for state workers. ... State Senate President Darrell Steinberg, a Democrat, said: 'I have one reaction: You've got to be kidding me.' He and other legislative leaders said they were opposed to any more cuts to welfare and health programs. Instead they said they preferred federal help or taxes on, for example, oil drilling and tobacco sales. ... The state has delayed billions of dollars of payments and issued IOUs to keep the government from defaulting. ... 'My concern at this point is that the negotiations could go on longer than the amount of cash the state has on hand,' said Gabriel Petek, analyst at Standard & Poor's Corp. which has California on a negative ratings outlook", Stu Woo & Jim Carlton at the WSJ, 9 January 2010, link:

I agree.

I said this was coming decades ago. This is no surprise.

I agree with the NYT. Repeal Caifornia's drug laws. Now. Prison privatization is another panacea, see my 7 November 2009 post:
California is hopeless, unless you're an illegal alien or anchor baby. If neither, leave.


Anonymous said...

Over 1% of the CA budget goes to this line item...

"This program provides funding for health and dental benefit services for retired state employees and their dependents.

The program began on January 1, 1962, with an employer contribution of $5.00 per month toward the cost of a basic health plan. Since then, major medical plans, Medicare, and plans supplementing Medicare have been developed. Dental care was added in 1982.

The 2009-10 employer contribution for health premiums maintains the average 100/90 percent contribution formula established in Government Code Section 22871.

Under this formula, the state averages the premiums of the four largest health benefit plans in order to calculate the maximum amount the state contributes towards retiree health benefits.

The state also contributes 90 percent of this average towards the health benefit costs of each of the retiree's dependents. The retiree is responsible for paying all health benefit plan costs that exceed the average of the four largest benefit plans.

The 2009-10 monthly contribution maximums are $493 for a single enrollee, $936 for an enrollee and one dependent, and $1,202 for an enrollee and two or more dependents. Dental care premiums vary by plan and number of dependents.

The river of red ink.

Anonymous said...

likely to go down and drag Nevada down with it in the process.

probably will eak things out doing a "Donner Party re-make" by eating each other as entities die off.

emgerges from the other side looking like a walking / talking crypt keeper from Tales from the Crypt.

I hate saying that because I have one friend living in CA and another in Idaho.


Dallas CPA said...

I'm up for taxes for the benefit of all. Education and future infrastructures are what we need to invest at this moment.

Without adequate education, it is only a matter of time before Chinese and other Asians countries surpass us.

Without infrastructure, we cannot create the environment needed for our country to advance.