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Political Hay
Spending at All Costs
For the Left, the cost of spending is never too great. As Harold Meyerson's recent Washington Post column "How the Golden State Got Tarnished" shows, the price often includes factual accuracy. Only by overlooking the fiscal and political facts can he advance his argument that California is hostage to a minority's opposition to the tax increases necessary to "move [it] toward a more sustainable economic future."
Meyerson attributes California's current deficit problems to the 1978 passage of the tax limitation amendment Proposition 13. He argues this initiative allows a willful minority of conservative ideologues to prevent the tax increases the fiscal situation, and the majority of Californians, demand.
Asserting "we must understand the state's road to insolvency," Meyerson incredibly fails to make any mention of the state's spending! Since deficits are composed of two parts -- revenues and outlays -- it is logical to expect both to be examined. That would be the route if the truth, rather than a conclusion, were being sought. Failing to even once reference spending is not akin to telling half the story; in California's case it is not telling any of it.
Looking at state revenues and expenditures in the years following 1978, when Proposition 13 passed overwhelmingly with 70% of Californians voting and 65% supporting it, we see a very different story from the one Meyerson tells.
In its 1978/79 budget, California spent $16.1 billion from its General Fund. In its 2007/8 budget, the year before the current deficit debacle, California spent $103 billion from the General Fund. That is a 640% increase over the period. And even this view of spending is conservative because the General Fund excludes several other sources of the state's spending, such as federal funds, special funds, and bond funds.
Looking at the same period, California revenue increased 680% -- rising from $15.1 billion to $102.6 billion. Meyerson's argument that Proposition 13 "reduced revenue" is patently false. Not only has revenue increased -- it has increased in a greater percentage than spending -- but still cannot keep pace.
Of course, maybe California's performance is not out-of-line, even if out-of-step with its own fiscal needs. It is worthwhile to compare its revenue and expenditure growth with some external yardsticks. Let's take two: federal performance and GDP growth.
Over the comparable period, 1979 through 2008, federal outlays increased from $504 billion to $2,978 billion, while federal revenues increased from $463 billion to $2,524 billion. Those translate into a spending increase of 590% and revenue increase of 550%. Over the same time, GDP increased from $2.5 trillion to $14.2 trillion, a 570% increase.
California's fiscal growth -- both expenditures and revenues -- outpaced the federal government's and the economy's. By any measure, California has spent itself into its current circumstances. Because of that, Meyerson's solution that the problem would be solved by increased taxes is equally wrong.
There is also a fundamental political problem with Meyerson's argument that taxes could be raised. He states "raising taxes now requires a two-thirds vote of the legislature…" The clear implication is that a minority is dictating fiscal policy to a large majority and that the state should "eliminate the two-thirds threshold for enacting taxes [and] …end the process of ballot-box budgeting through the initiative process…"
Amazingly, Meyerson fails to mention that six referenda on solutions to the California fiscal mess were voted on just weeks ago (May 19). California voted down five with at least 63% of voters opposing. (The only one that did pass, with 74 percent support, prohibited state lawmakers from raising their salaries if the state budget was not balanced.) The most significant of these failures was Proposition 1A. While establishing a state budget stabilization fund, it also extended three tax increases -- a sales tax, a vehicle license fee, and a personal income tax increase. Sixty-six percent of voters rejected it. The referenda again disprove Meyerson's theorizing.
Both fiscally and politically, Meyerson and the Left’s arguments are simply unsupported theory that crumples in collision with reality.
A lack of taxes? These have grown proportionally more than California's spending, more than federal revenues, and the national economy. Still they could not keep up with the head start California's spending had.
Needed taxes stopped by an obdurate minority? The recent voter rejection was overwhelming and bipartisan.
Meyerson's real problem lies not with taxes, but with facts. And California's fiscal problem is with its own spending. A fact its voters recognize all too well, even if the Left refuses to.
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Howard| 6.11.09 @ 7:37AM
I agree with the facts listed. However, if Californians love their programs so much, they should play for them. If not, get rid of them. The feds can print money and delay the day of reckoning, the states cannot.
Melvin| 6.11.09 @ 7:41AM
Where the hell is this, "Great Society," that President Johnson promised us?
Most if not all the large cities across this Country are controlled by Liberal Democrats who promise us, the Utopian nirvana of paradise if we just spend a little more money.
I ask you, is Detroit, Chicago, New York City, Los Angeles, Columbus, Minneapolis, New Orleans,to name a few, are these cities the promised paradise?
Don't we think for one minute that after all these years and trillions of dollars that there would be at least one of this cities that was worth a damn to live and raise a family in?
These cities are fetid pustules of Liberal decadence, crime, urban decay, and drug use. But the Liberals keep shoveling tax dollar after tax dollar into their failed philosophy of "if it feels good do it."
Nancy Pelosi, Diane Feinstein, Henry Waxman's own state is a stinking rotting mass of Liberalism. Compton, San Bernardino, East LA are urban battle grounds that make Falluja look like Disney Land. But the politicians keep hoping that by spending the next trillion or so that they'll turn that corner and then everybody will wear saffron robes and glide across the earth.
There is only one thing of this failed,"Great Society"
that has been a constant. A whole lot of bullshit.
Bob| 6.11.09 @ 9:29AM
Again, a TAS article of facts without analysis. Revenues in California grew primarily because of the success of the computer industry. Companies like Apple, Google, Oracle, Intel, HP, Pixar, etc., fueled revenue growth. While that was occurring, there was a huge growth in immigration with additional costs for health care, police, schools, etc. When the dotcom industry went bust, it started the downward spiral of CA. When the housing boom went bust, it finished it off.
They were able to survive the Prop 13 limits because of growth in the computer sector. As long as that sector continued to grow, it was OK and revenues were offset. One that growth slowed, then Prop 13 limits did negatively affect revenue growth. It became worse during the housing bust as property values declined and will continue to get worse.
So the truth is that Prop 13 is a problem when it is not offset. Misleading topline articles like this are an ideological sham if you don't dig deeper.
Now, the immigration problem in California MUST be addressed if they ever want to balance their budget since even if Prop 13 limits were raised, that alone would sink the state.
Spote the Roman| 6.11.09 @ 9:41AM
When lib programs fail to produce the claimed results, the explanation is always the same, "We didn't spend enough." As always, there is no basis in fact for the claim; it rests on the simplistic premise that the government solves all.
Hustings Observer| 6.11.09 @ 10:07AM
Every time I hear someone from the left decry the state of California finances, I recall an anecdotal event. How long ago was it that the Governor promised this remarkable growth in the state's coffers by creating a haven for stem cell research. It was standard tit-for-tat liberal browbeating: Let go of your silly conservative social standards and you'll see a brighter fiscal future. Posh! Where did the output of this dynamo go?
John Navratil| 6.11.09 @ 10:10AM
So California's budget problems really are because of Prop 13, they were just hidden by the boom in the computer industry. Sounds a bit like the argument that the world is really warming, it's just being hidden by other factors at the moment.
Money is fungible. It's politically determined where it comes from and it's politically determined where it goes. One thing remains... if you spend more than you collect it is a deficit. Keeps doing it and California is what happens. It would be nice if the rest of the nation tool a lesson from this. I'll hold my breath.
John Navratil| 6.11.09 @ 10:12AM
I wish I could type...
"the rest of the nation TOOK a lesson from this"
Bob| 6.11.09 @ 10:24AM
John, it seems as if you don't understand the temporal nature of the argument. If the computer boom had not occurred, California would have gone under a lot sooner. The computer boom just delayed the outcome. Comparing this to global warming just shows you don't understand what's happening here.
If you have ever worked in business, you'd know that you can't address a problem unless you know what's causing it. That's what's wrong with your "money is fungible" argument.
Brian B| 6.11.09 @ 10:57AM
--So the truth is that Prop 13 is a problem when it is not offset. Misleading topline articles like this are an ideological sham if you don't dig deeper. --
No, the truth is, due to reassesment, property tax revenues in CA from 1979 to 2008 increased over 600% as well. There is no Prop 13 straightjacket.
Had CA spending been limted to its 1990 levels and only increased at the rate of inflation and population growth we would now have a $15 billion surplus. In 1990 we had a perfectly adequate, I would submit even then an obscenely bloated, government.
The problem is over spending, period.
Brian B| 6.11.09 @ 11:09AM
Bob, you get the effects of the dotcom and housing bubbles backwards as well.
Both events artificially raised state revenues enormously. Of course the state then raised spending enormously as well because the golden goose was laying more and more eggs.
This high level of spending would not have been able to occur without the bubbles, so, far from delaying CA's demise, the bubbles enabled and hastened it by allowing our government, and at times the voters themselves, to act even more irresponsibly than usual. And when revenues declined to their normal baseline all those spending programs were still sitting there spending non existant bubble money.
L. Ross| 6.11.09 @ 11:09AM
Bob:
Good to hear from you again.
One big problem with finances here in the "golden state" is that our idiot voters keep going to the polls and demanding new spending for projects. Like California's independent stemm cell research project, funded with billions of dollars, or how about the new high speed rail project that was recently approved, to connect LA with San Fran. It seems to me that every time I go to the polls, about 85% of the new proposed spending that is on the ballot gets approved. Then people look stupidly at each other when they A. don't want to raise their own taxes and B. cannot afford to pay for all these new projects they just voted to fund. California is truly filled with idiots.
L. Ross| 6.11.09 @ 11:12AM
Brian B.
Very good points as well. Well done.
Stan Redmond| 6.11.09 @ 11:23AM
If California had maintained low levels of spending and taxing a dotcom bubble would not have mattered. Politicians grad all that money and spend all that money and never plan for innevitable slow downs in the economy. This is not a failure caused by too little taxes. This is a problem of out of control government expansion and programs with political stupidity managing California budgets. Blaming tax payers for the stupidity of California's politicians is immoral. there is never enough money to satisfy the sticky fingers of tax dollar spenders It is good to see the taxpayers say "enough" and the collapse of the bloated government in California. Why the assumption that the government can never do with less?
John Navratil| 6.11.09 @ 11:55AM
Bob,
To add to Brian B.'s comments, that 600% increase in property tax revenue is slightly MORE than overall state revenue. Prop 13 ain't the problem.
Perhaps I don't know what is going on there, but as a sole-proprietor of my own consulting business I spend my day looking for the causes of problem and fixing them. I stand by my assessment.
jwmatney| 6.11.09 @ 12:03PM
I live in California and while my property taxes as a result of Prop 13 were based on the sales price of my home, that is not what makes me angry. It is the constant adding of "parcel taxes" to my bill that makes me mad. Sacramento has overspent for decades. The problem as the author acurately states is SPENDING, not TAXING. Californians are already overtaxed. From paying something called CRV for each bottle of soda or beer which is called a deposit, but there is no place to turn in the bottles for cash back (clever, these politicians), to the highest gas taxes in the country, to the most expensive subway (BART) on the planet etc. etc. etc. Morons who doon't live here who advocate taxes won't be happy until I'm living in government housing and bicycling to the BART station for my 20 dollar round trip to work. Get a grip jerk off and start taxing yourself, by the word!
Son Of Sam| 6.11.09 @ 12:30PM
Oh fer cryin' out LOUD! In your own personal life, do you run up debts because you don't make enough money? Or do you go into debt because you SPEND more than you've earned, no matter how much or little it is?
It doesn't matter whether you're talking about a person, a town, a city, a state or a country: it's THE SPENDING, STUPID!
stand strong until freedom dawns
Son Of Sam
http://www.samadamssos.bravehost.com
Griff| 6.11.09 @ 1:02PM
Melvin,
"Where the hell is this, "Great Society," that President Johnson promised us?"
I presume this was a rhetorical question. As you an I both know, the Great Society was a tool used to enslave large voting blocks on the Democrat plantation.
Richard Baker| 6.11.09 @ 7:07PM
I was in High School in the late '60s when this all took root. It didn't make sense then because there was NO Great Depression, far from it, even though LBJ kept alluding to that previous problem. Now, we have millions of Blacks, Latinos, and others trapped because LBJ only wanted to help. Especially with what we know now about Johnson, that should be enough to impeach his and these programs' credibility. Sadly, the Politicians in both parties are still using these disasters to trap and enslave the same people, as always. Tell me again. What problems have been solved by this foolishness?
Marc Jeric| 6.11.09 @ 7:57PM
Americans lack experience with the real marxism/communism. Our far-left knows what they are doing in their pursuits for eternal power. Being a refugee from acommunist regime I know better: their aima are the following:
1) all enterprises are government-owned and controlled by a single government employee union;
2) the entire Gross National Product is the goovernment product;
3) all private income is only what the government decides you can keep (they call it no-tax system).
ds80| 6.12.09 @ 10:27AM
John Navratil:
(1) "Sounds a bit like the argument ..."
(2) "... if you spend more than you collect ..."
Nail.
Head.
Enough said.
(Well done, John)
Read it again, Bob. Is this too complex for you:
Son of Sam: "it's THE SPENDING!"
jj| 6.12.09 @ 12:08PM
I can't believe nobody has mentioned the burden of millions of illegals and their anchor babies. This is what is draining California coffers from much needed funds. I mean, its completely inane to state, as Arnie did, that illegals aren't costing us anything. The last time they did a study on the costs, it was 16B a year we were pissing away on servicing illegals. This is unconscionable public theft on a massive scale that makes Bernie Madoff look like a kid stealing from the cookie jar. If you tally up the many tens of billions that CA taxpayers have poured into supporting some other country's citizens, it would be shocking, hundred billion, perhaps more.
And these sellout leftists who run CA are determined to make that even worse. At some point people just have to stop feeding this evil beast, and starve it to death, that is the only solution. Somehow the government must be forced to do the right thing. Maybe its civil disobedience on a massive scale, maybe its armed and violent resurrection against these government tyrants, but whatever it is has to be complete and swiftly done. There is no opportunity for gradual change here. CA is in its death throes.
John Navratil| 6.12.09 @ 4:21PM
jj,
The cost of illegal aliens is often touted as the reason public coffers are drained. That may or may not be the case; there are studies which call it both ways but there is no need to disagree with you. (Unless they are living under a bridge, illegals pay property taxes through rent. They pay sales taxes, gasoline taxes and a raft of other excise taxes. They pay payroll taxes unless they work in cash.)
I would like to make the point that Texas also has millions of illegal aliens. Yet we are not in the same economic straights as California. Could it be that our illegal aliens don't consume public services like yours do?
Richard Baker| 6.12.09 @ 9:58PM
John:
Tell Arnold that illegal, (you do know the meaning of that word, don't you?), aliens are not costing the Californians $10-20 billion per year and that they are a huge cost to the taxpayers. It seems that folks like you have a selective interpretation of that concept. The word is in any dictionary. By the way, Texas is one of the few states growing and California is not. You do know where money comes from? Say it with me: Productivity.
John Navratil| 6.13.09 @ 9:21AM
Richard Baker,
'Illegal'! It sounds familiar. Let's see if I can work out what this means. First let's break it up. 'Ill' ! That's easy, it means sick. And 'egal', that's the national symbol, isn't it. So 'illegal' means the nation is sick! See, I'm really just as erudite as you, right?
I did NOT claim aliens are not costing Californians $10-20 billion per year. There is, however, some debate over how much they contribute. I don't know, you don't know and if the many studies we read can seem to agree, they don't either. Something about their status seems to make reliable data collection difficult.
Now what, exactly, am I selectively interpreting?
Yes, Texas is productive. It also has low taxes, lot's of Californians transplant and illegal aliens. The difference is we haven't spent our way into oblivion for the last thirty years.
Mark | 6.13.09 @ 1:08PM
I wonder: Has anyone ever figured out the real cost of removing tens of millions of dollars from circulation...as the illegal aliens do when they send money "back home." Not only are they sapping government revenues, but the evaporation of money from circulation in California has to have a huge impact.
John Navratil| 6.13.09 @ 2:24PM
Mark,
That money comes home because at the end it is used to purchase American goods. This is no different from any "balance of trade" issue. Here labor is being imported as opposed to finished goods. Unfortunately for California, those dollars don't have to go back to California.
I've often said that the only reason we have Mexican roofers and gardeners is that it is impractical to export our roofs and lawns to Mexico. Other jobs, we export.
Richard Baker| 6.13.09 @ 5:31PM
John:
With the dictionary that you use, it's no wonder your thought processes work the way they do. When the very language is an impediment then confusion reigns. Sprechen sie deutsch?
John Navratil| 6.14.09 @ 12:22AM
Richard Baker,
Jah! Ich kann auch Deutsch. Und du?
SoCali| 6.21.09 @ 11:28PM
John, how can you compare American citizens/Californians to illegal aliens as transplants to Texas? Are you crazy?
Californians are most likely highly educated, have good job experience and are self-supporting. Most illegals are poorly educated, not self-sufficient; and many can't speak English. No way do the illegals' taxes pay for the services they receive. That's been proven.
You say that California has overspent--you're right--on ILLEGAL ALIENS!! Illegal aliens have sucked us dry, bet you're next.
Dude, you're a moron.
Pat| 7.2.09 @ 12:19PM
Taking religion off the dole would be one brave act Obama can and should do in hopes of restoring sanity to government.
Reducing bloated bureaucracy doesn't appear possible any longer after the bail out, but isn't that what most Americans hoped for - in electing for change?
If corporates claim to be people under the Constitution, why don't they pay taxes too like the rest of us?
Double taxation only applies when there is one person, not two. The invention of the corporate person created the second, and obviously, both should pay.
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Pete| 10.17.09 @ 12:37AM
Don't know how much illegal aliens cost the taxpayer. But is this the way a prudent and reasonable sovereign nation handles its' immigration? Does any other sovereign nation put up with this happy horsepucky? Why should we be the exception?