LAT Columnist: State Spending Problem a "Myth"...Unless You Count All State Spending

Matt Welch | May 28, 2009

In today's installment of You Californians Are Just Too STUPID, L.A. Times ~~anti-~~business columnist and recovering sock-puppetteer Michael Hiltzik thunders: "California's problem is spending? That's a myth." Hiltzik's case:

[T]he idea that California's budget has been out of control as measured against inflation and population growth is a deeply cherished talking point in the debate over the state's fiscal deficit.

Unfortunately, it turns out to be yet another infectious myth. The truth is that over the last 10 years, California's spending has tracked population growth and price increases almost to the penny.

This finding comes from the nonpartisan legislative analyst's office, which subjects the state budget to more careful scrutiny than almost anyone else in Sacramento.

Analyzing the 2008-09 budget bill last year, the legislative analyst determined that since 1998-99, spending in the general fund and state special funds -- the latter comes from special levies like gasoline and tobacco taxes -- had risen to $128.8 billion from $72.6 billion, or 77%.

During this time frame, which embraced two booms (dot-com and housing) and two busts (ditto), the state's population grew about 30% to about 38 million, and inflation charged ahead by 50%. The budget's growth, the legislative analyst found, exceeded these factors by only an average of 0.2% a year.

What's missing from this analysis? Hiltzik cops to it a few paragraphs later: Bond spending. Which, as he quotes the state legislative analyst as saying, has amounted to $85 billion in voter-mandated issuances this decade alone.

In what universe does "bond spending" not count as "spending"? Does this mean I am not technically spending when I buy stuff with my credit card? If a "deeply cherished talking point" turns out to be true, can it still be "infectious"? These are the questions.

To see what an honest and complete accounting of California budget data over the past two decades looks like (hint: the phrase "almost to the penny" is not used), consult the Reason Foundation's study [PDF] "California Spending By the Numbers."

UPDATE: The San Diego Union-Tribune's Chris Reed has found what he calls a "Huge, obvious error" in Hiltzik's calculations of population growth.

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|5.28.09 @ 11:11AM|#

Should we just assume by default that anything that comes out of the LA Times on this subject is just an out and out lie?

robc|5.28.09 @ 11:14AM|#

Hmmm...if you are ignoring bond spending, doesnt that basically mean that state revenue has tracked inflation and population growth?

So, if they had held spending to the same growth level, they would have had a balanced budget.

|5.28.09 @ 11:20AM|#

You borrow some money to buy stuff, but since it wasn't your money, it doesn't count. And, besides, you can borrow some more money later to pay off the first loan. And so on.

Simple.

Shorter Hiltzik: The state cooked the books to maintain technical compliance with the balanced budget requirements.

Shorter Welch: Technical compliance with balanced budget requirements is meaningless when there is a gaping loophole through which trainloads of cash were spent.

Short Dean (if I was running the LA Times): Hiltzik, you're fired.

|5.28.09 @ 11:28AM|#

What happened to editors? How can something this laugh out loud stupid get printed in a major newspaper? It points to the the fact that the problem with the media is not that they are biased. The problem is that they are intellectually dishonest.

You don't have to be a member of the NeoCon cabal to admit the obvious. California has spent too much money. Admitting that requires a shread of intellectual honesty. And it also requires admiting that maybe the other side occasionally has a point. Things like this show that the media is incapable of doing that. They are effectively a state run media. Honestly, if the State of California owned the LA Times, would this piece have come out any differently?

Xeones|5.28.09 @ 11:36AM|#

It's like Hiltzik's not even trying. All he's doing is making word count. He probably thinks he ought to get a piece of the eventual federal newspaper bailout, too.

|5.28.09 @ 11:37AM|#

"Hiltzik cops to it a few paragraphs later..."

So just past the point that the lefties quit reading the article saying to their friend, "See, I knew it was a right wing conspiracy!"?

|5.28.09 @ 11:40AM|#

In the paragraph right after the quote from the newspaper, you have "amouned," when I believe you mean "amounted."

Steve Smith|5.28.09 @ 11:46AM|#

Since bond measures have to be approved by the voters, then the Times' denunciation of Californians as "JUST TOO STUPID" (as you put it) would appear to be on target, as well as Hiltzik's point. Whatever happened to the old Matt Welch, who occasionally challenged the presumptions and prejudices of his readers?

|5.28.09 @ 11:49AM|#

Welch... you're the man.

|5.28.09 @ 11:54AM|#

"Since bond measures have to be approved by the voters, then the Times' denunciation of Californians as "JUST TOO STUPID" (as you put it) would appear to be on target, as well as Hiltzik's point. Whatever happened to the old Matt Welch, who occasionally challenged the presumptions and prejudices of his readers?"

One, they have to be proposed by politicians. The fact that people were too stupid to vote them down doesn't let politicians off the hook. Further, just a guess but I would imagine politicians campaigned hard for those bond issues using scare tactics of "save schools and police protection" and the like to get them.

More importantly, Hiltzik's point is laughably stupid. He is trying to claim that since the spending came in the form of Bonds approved by the people rather than ordinary appropriations, spending isn't a problem. It makes so little sense it is difficult ot even express it in a sentences.

Matt Welch|5.28.09 @ 11:55AM|#

Thanks Michael, fixed it.

Smith -- Hiltzik's "point" is in his headline, which is literally false. The old Matt Welch liked to be a literalist prick, too, though often in the service of pointing out that Bush Lied.

As for that secondary point, it is indeed interesting, and could have made a helluva column, a la "California would have no spending column if it weren't for the voter-approved bond measures." Don't know if it's true (and rather suspect that it's not, given the strong role that lawmakers play in pushing bond measures onto the ballot), but it's an interesting argument. What's NOT interesting is sneering about some "myth" that isn't in fact mythological.

Matt Welch|5.28.09 @ 11:59AM|#

"Column," "problem," whatever.

24AheadDotCom|5.28.09 @ 12:07PM|#

Here's a comment I left on an earlier entry here:

Reason's complaints about subsidies and the problems CA is having might mean something if they didn't support massive subsidies and if their ideology hadn't played a role in helping CA get into the shape it is.

Reason has consistently supported MassiveImmigration without making eliminating the WelfareState a precondition. That MassiveImmigration has not only greatly increased spending by CA, it's given a massive subsidy to crooked businesses. And, it's given a great deal of PoliticalPower to the far-left; the far-left has responded by using their additional power to push for more spending.

I frankly don't know whether Reason is corrupt or stupid, but it doesn't really matter. Their ideas have been shown to be faulty and no one should take their advice on getting out of the problems their ideology helped create.

P.S. In case anyone replies to this, their responses will almost assuredly be ad homs, thereby conceding my points and showing the childish, anti-intellectual nature of libertarians.

|5.28.09 @ 12:08PM|#

It's also certainly true that California politicians could say, "Well, the voters approved bond spending on this. Guess we had better cut spending elsewhere to pay for it."

It's a separate-- and, as Matt notes, potentially interesting-- question of how much bond and other voter-directed spending was a substitute for politicians spending that money directly.

JB|5.28.09 @ 12:09PM|#

MSM journaleasts are fucking stupid.

|5.28.09 @ 12:10PM|#

Yeah, OK but still. It's not a myth that Californians are just too stupid.

|5.28.09 @ 12:11PM|#

24AheadDotCom,

I'm pretty certain that Reason has proposed and supported various changes in the welfare state and in taxation that do exactly what you're asking for. I'm not sure how an opinion magazine is supposed to attach preconditions to all of its advocacy. Reason is not a politician.

Are you expecting that every single article include disclaimers about how Reason still believes in every other policy mentioned in every other article?

|5.28.09 @ 12:14PM|#

"The truth is that over the last 10 years, California's spending has tracked population growth and price increases almost to the penny."

Please do tell me how one can track population growth in a state that has an unknown quantity of illegal aliens pouring over the border each day?

To me this is much like the government or DEA coming out every year with the % of drugs they took off the streets or intercepted before making it to the US.

I still have a crisp $100 bill waiting for the first person that can tell me what 36% of the number I have in my head amounts to. It has been up for grabs for years now and amazingly enough no one yet has managed to tell me what % of an unknown quantity equals.

Xeones|5.28.09 @ 12:20PM|#

Shut the fuck up, LoneWacko.

John Thacker, don't engage fucking LoneWacko.

|5.28.09 @ 12:26PM|#

I find this post to be stupid. Hiltzik is intelligent, handsome, and has extremely fresh breath.

The Extispicator|5.28.09 @ 12:30PM|#

Michael Hiltzik's Sweater is Cool? That's a myth.

T|5.28.09 @ 12:32PM|#

Hiltzik is intelligent, handsome, and has extremely fresh breath.

He's much better than Cats, isn't he?

|5.28.09 @ 12:33PM|#

Several questions:
Hiltzik states that the Cal. Leg. Analyst does not use CPI but a gov't spending index which when combined with population growth is closer to actual budget growth.The Reason Foundation report uses something called California CPI- is this a consumer CPI or Hiltzik's version?
I recall that the LA Times endorsed several bond measures on the Nov. 08 ballot, including high speed rail. How many of the ballot spending measures were placed by the legislature, how many by the voters, and how many were endorsed by the Times? How many by the OC Register? Did Hiltzik ever challenge an editorial endorsement of a spending measure? I think the Times' other "business" columnist Lazarus often speaks rhapsodically of high speed rail, light rail, subway to the sea and Jetsons' type space travel without ever seriously engaging the costs.

Certainly a lot of point to this. Californians want high spending and low taxes, and punish politicians who want to cut spending or raise taxes.

I know that Reason likes to latch on to individual data points to try to claim that people are really libertarian, but people just aren't. Lots of people claim to be libertarian (or fiscally conservative and socially liberal) in theory, but they make enough exceptions on the hot button issues of the day to bankrupt a state or a country.

Mike|5.28.09 @ 12:34PM|#

A woman was praying, and suddenly God appeared. God said, "You have been so good your whole life, I'm going to give you one wish." The woman replied, "I've always been dismayed by the situation in the Middle East. Could you make it so there was permanent peace?" God said, "That is a very tough problem. I've been working on it for thousands of years and still haven't come up with a good solution. Could you pick another wish?" The woman replied, "Could you balance the California budget?" God replied, "I'll see what I can do about the Middle East."

|5.28.09 @ 12:37PM|#

If being libertarian in the Reason were actually as popular as I'd like, then such candidates would at least be able to win and hold office. But for some reason, almost all economically libertarian politicians that get elected are pretty socially conservative (including Ron Paul), or get elected from districts that are incredibly gerrymandered and safe for Republicans, not from swing districts. "Moderate" politicians are overwhelmingly not libertarian; it's much more common to find a fiscal liberal social conservative "moderate" than the reverse.

The Governator ran on a libertarianish platform and won, but politicians refused to pass it and voters rejected all the reform ideas at the ballot. Cutting spending sounds good to people until their spending gets touched. So he moved to the position of what voters actually vote for, as opposed to what some people claim that they want.

Mike M.|5.28.09 @ 12:38PM|#

I'm pretty certain that Reason has proposed and supported various changes in the welfare state and in taxation that do exactly what you're asking for. I'm not sure how an opinion magazine is supposed to attach preconditions to all of its advocacy. Reason is not a politician.

I have seen FAR more articles on Reason (especially in the last few years) extolling the virtues of unlimited immigration than I have seen articles calling for the scaling back or the elimination of the welfare state.

And as per 24AheadDotCom's main point, I'm not sure I've ever once seen on Reason a concession that huge levels of immigration into a big welfare state might not necessarily be a good idea.

alan|5.28.09 @ 12:43PM|#

P.S. In case anyone replies to this, their responses will almost assuredly be ad homs, thereby conceding my points and showing the childish, anti-intellectual nature of libertarians.

Self parody much?

Xeones|5.28.09 @ 12:48PM|#

Self parody much?

Nah, he's just sensitive because all the mean wibuhtawians pick on him for being an abhorrent, ludicrous racist. Why, we don't even click on the links to his terrible website! And yet he keeps coming back.

JB|5.28.09 @ 12:59PM|#

And as per 24AheadDotCom's main point, I'm not sure I've ever once seen on Reason a concession that huge levels of immigration into a big welfare state might not necessarily be a good idea.

I think I've seen one or two, but not many. Reason needs to do a better job on the complicated immigration issue.

neener|5.28.09 @ 1:02PM|#

... and in a dark, dank basement somewhere in middle America, LoneWacko disconnects his 56k modem and turns his attention to "two girls, one cup." It took all night to download it via his dial-up connection, but it won't take nearly as long to complete the fantasy in his mind. He wondered if Ann Coulter and Michelle Malkin ever succumbed to the lure of sapphic love after a night out like Momma and big sis once did.

Ah, the Before Time. Before the registry. Before the conviction. Before the social worker came and broke everything that was. Back when his anus was tight and the broom handle Momma used hurt him so good. Do Ann and Michelle know this sort of hurt? The good kind? Would they treat him with the contempt big sis used to? Would they violate his aching holes the way only blood relations can?

The thought melted away as the girls squatted over the cup and his mind superimposed Ann and Michelle's faces over theirs. He could almost smell the smell and taste the taste ...

IlegalImmigrant|5.28.09 @ 1:10PM|#

Hey, shut de fuck up, LoneWhacko

Spoonman|5.28.09 @ 1:15PM|#

Jesus, neener. Why the fuck did I read that?

neener|5.28.09 @ 1:21PM|#

I haven't seen the usual suspects arrive on the thread yet, so I was compelled to add a chapter to the LoneWacko story in their interim.

My poor attempt does not hold a candle to their inspired prose though, I assure you.

|5.28.09 @ 1:24PM|#

Seems perfectly cromulent to me.

|5.28.09 @ 1:36PM|#

Definitely Pelosi-worthy*, neener.

A "Pelosi" is throwing up in your mouth, and then having it go up your nose because you are simultaneously laughing so hard. Originally discovered during Hit 'n' Run slash comments describing a Pelosi-Feinstein bondage session.

Math Girl|5.28.09 @ 2:11PM|#

"I still have a crisp $100 bill waiting for the first person that can tell me what 36% of the number I have in my head amounts to"

X = 0.36 x DC*

* the Dee Constant.

Sonia Sotomayor|5.28.09 @ 2:15PM|#

"I think I've seen one or two, but not many. Reason needs to do a better job on the complicated immigration issue."

Let them all in I say. They all are wiser than white people.

24AheadDotCom|5.28.09 @ 2:58PM|#

John Thacker says: I'm pretty certain that Reason has proposed and supported various changes in the welfare state and in taxation that do exactly what you're asking for.

1. I'm not "asking for" that; personally, I find the econ side of libertarianism morally abhorrent.

2. What I'm saying is that Reason has never made ending the WelfareState a necessary pre-condition to MassiveImmigration. What I'm saying is that Reason has consistently supported MassiveImmigration despite the fact that in our present reality that increases spending and gives more power to those who will demand more spending. In other words, Reason has never coupled the two: they've never said, "We support MassiveImmigration, but only when the WelfareState is abolished."

And, regarding SS, she was a member of the National Council of La Raza. See the link for a full summary of that group based on my extensive coverage of them going back to 2004.

In fact, the group she was a member of gave an award to someone who'd made eliminationist comments years before.

Richard Rider - Chair - San Di|5.28.09 @ 3:35PM|#

Chris Reed, the libertarian SAN DIEGO UNION-TRIBUNE editorial writer, sticks a dagger in the LA TIMES "analysis." The population assumption is wildly inflated.

Instead of CA population going up 30% over 10 years, figures show that it went up only 13.8%. Hence, even WITHOUT the bond spending, our state spending has been going up considerably faster than population growth plus inflation.

If you do not get the RSS feed for the Chris Reed blog, you should. He does great work.

Here's his comment on this topic:
http://weblog.signonsandiego.com/weblogs/afb/archives/033910.html

Richard Rider - Chair - San Di|5.28.09 @ 3:37PM|#

While our CA total population has grown during the past 10 years, our departures are people we don't want to lose.

Consider California's net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed this past year only because people couldn't sell their homes.
http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf

These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods), and retirees seeking to make their pensions provide more bang for the buck.

The irony is that a disproportionate number of these seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions - in order to avoid the high taxes that these same employees pushed so hard through their unions.

Richard Rider - Chair - San Di|5.28.09 @ 3:38PM|#

Breaking Bad: California vs. the Other States
by Richard Rider, Chairman, San Diego Tax Fighters
Version 1.41 Revised 22 May, 2009
Phone: 858-530-3027 RRider@san.rr.com

Here's a depressing comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse:

California has the 2nd highest state income tax in the nation. 9.55% at $48,000. 10.55% at $1,000,000

By far the highest state sales tax in the nation. 8.25% (not counting local sales taxes)

Highest state car tax in the nation - at least double any other state. 1.15% per year on value of vehicle.

Corporate income tax rate is the highest in the West. 8.84%

2009 Business Tax Climate ranks 48th in the nation.
http://www.taxfoundation.org/research/topic/15.html

Fourth highest capital gains tax 9.55%
http://www.thereibrain.com/realestate-blog/capital-gains-tax-rates-state-by-state/109/

Second highest gasoline tax (58.3 cents) in the nation (April, 2009). When gas is $3.00+/gallon, we are numero uno.
http://www.api.org/statistics/fueltaxes/

Fifth highest unemployment rate in the nation. (April, 2009) 11.0%
http://www.bls.gov/news.release/laus.nr0.htm

California's 2009 "Tax Freedom Day" (the day the average taxpayer stops working for government and start working for oneself) is again the fourth worst date in the nation - up from 28th worst in 1994.
http://www.taxfoundation.org/research/show/387.html

1 in 5 in LA County receiving public aid.
http://www.latimes.com/news/local/la-me-welfare22-2009feb22,0,4377048.story

California prison guards highest paid in the nation.
http://www.caltax.org/caltaxletter/2008/101708_fraud1.htm

California teachers easily the highest paid in the nation.
http://www.nea.org/home/29402.htm (CA has the second lowest student test scores)

California now has the lowest bond ratings of any state, edging out Louisiana.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/19/BA7F16JLKH.DTL

California ranks 44th worst in "2008 lawsuit climate."
http://www.instituteforlegalreform.com/component/ilr_featured_tools/29/item/LAI/19.html

In 2005 (latest figures), for every dollar Californians sent to D.C. in taxes, we got back 78 cents - 43rd worst.
http://www.taxfoundation.org/taxdata/show/22685.html

America's top CEO's rank California "the worst place in which to do business" for the fourth straight year (3/2009). But here's the interesting part - they think California is a great state to live (primarily for the great climate) - they just won't bring their businesses here because of the oppressive tax and regulatory climate.
Consider this quote from the survey (a conclusion reflected in the rankings of the characteristics of the state): "California has huge advantages with its size, quality of work force, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster."
http://tinyurl.com/cyvufy

With 12.1% of the nation's population [36,756,666 divided by 303,824,640], in February, 2009 California was responsible for 20.9% of the newly unemployed. To state it differently, in February California's percentage growth in UNemployment was 72.7% above the national average.
http://www.bls.gov/news.release/mmls.htm

California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is by far the lowest in the nation. How low? Nationwide, the average community college tuition is 4.5 times higher than California CC's. This ridiculously low tuition devalues education to students - resulting in a 30+% drop rate for class completion. In addition, many California CC students fill out a simple form that exempts them from ANY tuition payment at all.
http://www.sacbee.com/static/weblogs/capitolalertlatest/020722.html

On top of that, California offers thousands of absolutely free adult continuing education classes - a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.
http://www.sdce.edu

California residential electricity costs an average of 28.7% more than the national average. For industrial use, CA electricity is 48.6% higher than the national average (11/08).
http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html

It costs 38% more to build solar panels in California than in Tennessee - which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state.
http://www.foxandhoundsdaily.com/blog/jack-stewart/more-solar-companies-producing-elsewhere-sell-california

Consider California's net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed this past year only because people couldn't sell their homes.
http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf
These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods), and retirees seeking to make their pensions provide more bang for the buck. The irony is that a disproportionate number of these seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions - in order to avoid the high taxes that these same employees pushed so hard through their unions.

As taxes rise and jobs disappear, we lose our tax base, continuing California's state and local fiscal death spiral. This spiral must stop NOW.

NOTE: If you would like to receive my free periodic "Richard Rider Rant" e-newsletter with more of this type of information and analysis, just drop me an email at RRider@san.rr.com. To see the latest version of this "Breaking Bad" column, plus samples of my free "Richard Rider Rant" e-newsletter, go to my blog at http://www.RichardRiderRant.blogspot.com/.

neener|5.28.09 @ 4:05PM|#

LoneWacko ascended the stairs, carefully avoiding the broken step along the way. Upon reaching the top, he let his eyes adjust to the light for a moment, then surveyed his surroundings. The walls were covered in strips of peeling floral wallpaper long gone out of style and discolored by decades of cigarette smoke and the oil emitted from countless meals of fried food. Square-shaped patches denoted where pictures or flea-market art once hung. The wood floors showed the years of hard use they had endured. Pitted and scratched, the uneven planks bore unusual stains and discarded cigarette butts.

A sagging couch sat against one wall, upon which his mother reclined, naked. Weighing in at well over five hundred pounds and uninterested in leaving the hovel, clothing ceased to be a necessity. Her body was a road map of a hard-lived life. Cigarette burns, faded tattoos naming various beaus (any one of whom could be my father, recalled LoneWacko), scars on her legs, back and genitals from the "tough love" sessions of suitors long past ... she showed character, but none of it good.

A sharp, bubbly, extended release of flatulence erupted from somewhere deep within her folds, breaking the uncomfortable silence.

"Suck!" she commanded. Bits of the off-brand pastry she had consumed hours before became dislodged from the corners of her mouth and flew like tiny grenades onto the faded throw rug before her. LoneWacko immediately dropped to his knees and crawled penitently toward her. He grasped a large, floppy breast and held the nipple to his mouth. The stench of her body odor long since ceased to bother him. He reached around to his now-quivering anus as he began to suck. Across the room cousin Lester sat in a half-rusted folding chair, awaiting his turn.

|5.28.09 @ 4:24PM|#

Here is Guglielmo Ferrero writing in 1899:
"When the fountains of government abundance began to dry up, when through lack of funds and the impossibility of negotiating fresh loans the state was forced to check the extension of bureaucracy and to put a stop to public works, then and only then did the Italians realize what it meant to have allowed themselves to be made on of the most heavily taxed nations in the world."

Invisible Finger|5.28.09 @ 5:09PM|#

Staff cuts going on at all newspapers, especially Zell's papers, and this idiot manages to hang around. Probably wouldn't take a buyout since he knew no one else would hire him.

anon|5.28.09 @ 6:38PM|#

John & Ken, KFI 640am just mentioned this post, at 3:36pm PCT

-werd

|5.28.09 @ 6:39PM|#

I'm not "asking for" that; personally, I find the econ side of libertarianism morally abhorrent.

Oh, LoneWacko, I see. You're a national socialist.

|5.28.09 @ 8:29PM|#

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