The Tax and Spend Spectator

California Jumps Off a Cliff

Dr. Jerry Brown is the new Kevorkian.

By 11.14.12

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On Tuesday last week California jumped off a cliff. You could call it a case of assisted suicide -- economic suicide. California had been contemplating the action for a long time, making several tentative efforts to do itself in. Finally, it was the advice of Dr. Jerry Brown, the well-known assisted suicide specialist, who made the convincing argument.

The patient had a terminal illness. The medical term for it is "gross fiscal irresponsibility." If not treated, it leads to total collapse of all systems. Having ignored the symptoms, California is now in the late stages. Here are some listed on its chart:

  • $200 billion in unfunded liabilities for public worker retirement benefits.
  • $106 billion in voter-approved bonds the state hasn't sold because it can't afford the debt service costs (including a $9.5 billion "down-payment" on a $50-90 billion "high-speed" train).
  • Deferred payment of required $10 billion to schools.
  • Years of large annual budget deficits, "balanced" by means of accounting tricks and deferred payments.

Brown has called the budget "a pretzel palace of incredible complexity." He said he would fix it if only the voters would pass Proposition 30 on last week's ballot. If they did not, he warned, there would be deep cuts in education and social services. Scare California voters over the word "education" and they will usually do what they are asked to do. They did it once again in the case of Prop. 30. College students turned out in large numbers, worried that its failure would drive up their tuition. Many parents worried that classes would grow and instruction diminish, yet California in recent years has ranked in the bottom 20% of all states for test scores -- despite its $50 billion annual education budget.

California already spends half of its total annual budget on education. The Teachers' union spent $100 million to pass Prop. 30 and defeat Prop. 32 (which would have stopped the union from spending members' dues on politics without their consent).

The top income tax rate now will go up to 13.3%, easily the highest in the nation (rich people will do as they have been doing in growing numbers, move to low- or no-tax states). The sales tax is going up, too, from 7.25% to 7.5%. (Most cities add 1% or so to that for local use.) The measure is supposed to "sunset" in a few years, but as Ronald Reagan once said, "The nearest thing to eternal life we will ever see on this earth is a government program."

Meanwhile, it will generate about $6 billion the first year, versus a budget deficit of approximately $16 billion. Some fix.

The teachers' union spends $250 million a year on politics. This has proved to be a good investment. This year it got them passage of Prop. 30 and defeat of Prop. 32 and enough victories of its almost wholly-owned state legislature that added to the majority's total. Result: two-thirds majorities in both houses, making it possible to pass any and all spending measures without the "brake" of minority restraint.

When and how did this begin? Back in the late 1970s when Jerry Brown was a young man and governor the first time, he planted the virus by permitting public employee unions to engage in collective bargaining. Gradually, but inexorably, this has led to domination of Sacramento by them, thus to extremely generous pensions and benefits. Democratic majorities in the legislature have become ever greater, thanks to the largesse bestowed on them by the California's richest special interest. All so that a state could commit economic suicide.

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About the Author
Peter Hannaford was closely associated with the late President Reagan for a number of years. He is a member of the board of the Committee on the Present Danger. His latest book is “Presidential Retreats.”