SACRAMENTO – Ever since California's voters approved the Prop. 30 sales- and income-tax increase on the November ballot, liberal commentators have been gloating about the resurgence of the Golden State after many years of predicted doom and gloom. Their evidence: Higher taxes seem to have cleared up the state's budget deficits.
As New York Times columnist Paul Krugman wrote recently, "California isn't a state in which liberals have run wild; it's a state where a liberal majority has been effectively hamstrung by a fanatical conservative minority that, thanks to supermajority rules, has been able to block effective policy-making."
Krugman blames the "radical right-wing" for California's problems, claims that the school system – which captures 40 percent of the state's general fund plus local bond initiatives – is insufficiently funded (thanks to those evil right-wingers again) and believes that all is well now that "Mr. Brown [is] free to push an agenda of tax hikes and infrastructure spending … ."
It's odd to blame Republicans in a state where they have had only miniscule power for at least a decade and even weirder to suggest that California's milquetoast GOP is beholden to the radical right. The real questions: Has California been saved? Are higher taxes, more regulations and massive debt spending on public works the answer for the rest of the country?
California still has a great future, but we need to be realistic about its problems rather than embrace this "California is resurgent" myopia from ideologues pushing a big-government, union agenda.
For starters, California is far from being saved. All that has happened is a temporary elimination of the deficit on paper. That can quickly change and the state is still living off of borrowed money. Longer term, many businesses will move. They'll probably leave their headquarters here because this is where the CEOs like to live, but job growth and expansion will take place elsewhere. That's already happening.
California's dominant Democrats can now raise taxes, float debt and expand government at will. Republican "obstructionism" forced the state's liberal leaders to control themselves, but that control is over. Every hare-brained idea will have at a high likelihood of passing. Democrats already are pushing a host of new taxes and proposals that will make it easier for local officials to raise taxes, also. So the taxing and spending has just begun.
Of course, to Krugman and other leftists, that's the goal. As William Anderson of Frostburg State University in Maryland writes, "The fact that California has the highest taxes in the country, has a virulent anti-business governmental culture, and has rules that increase the cost of just about everything has nothing to do with it. After all, in Wonderland, higher costs translate into more spending, and more spending creates more wealth, so these 'problem' to which Krugman refers actually are opportunities for more government spending, which means a brighter future."
Note that these massive infrastructure projects – most of which are needless – will saddled the state with a crazy level of debt. Gov. Jerry Brown, who during his first time as governor adopted a "small is beautiful" approach that halted infrastructure projects, is now pushing obscene projects such as High Speed Rail, which is now even opposed by the author of the rail initiative because the project doesn't live up to its original promise. Brown also is pushing a Delta tunnel project – something that will cost tens of billions of dollars to change the flow of the Delta to save a tiny endangered baitfish known as the Delta Smelt.
Krugman skirts over the obvious bigger issues. The state's public schools are poor performers thanks to the lock that the California Teachers Association has over the school system. There used to be a time when liberal writers cared about poor kids, but no more. They rather defend the bureaucrats and the union officials that put their job protection above education.
Krugman claims that the right wing has invented a "new line of attack" – i.e., claiming that "liberal big spending and overpaid public employees were bringing on collapse."
But look at bankrupt Stockton. That city is decrepit largely because it spent most of its money on absurd levels of compensation for its workers and could no longer provide crucial services. Stockton may have taken it further than most, but it exemplifies the situation throughout California, which faces a half-trillion-dollar unfunded pension liability according to Stanford (obviously run by right-wingers!).
Then there's that little thing called freedom. California ranked as the 49th freest state in the union in a new Mercatus Center study. As the authors noted, "California not only taxes and regulates its economy more than most other states, but also aggressively interferes in the personal lives of its citizens."
This isn't to say that California is hopeless. I have no intention of leaving. But despite some good news on the revenue front, the state has abundant problems that need to be addressed. California may be a model for those who believe that most other states have not sufficiently copied the unsustainable welfare-state models of Western Europe, but it should offer warnings for everyone else.