Tuesday, June 15, 2010

Poor, Poor California


Congressman Tom McClintock on the "state" of California:

Here's a snippet of the key points of his July 2009 speech...

"I know that everybody likes to poke fun at California - but I can tell you right now that despite all of its problems, California remains one of the best places in the world to build a successful small business. All you have to do is start with a successful large business."

I'm sure McClintock meant it to be funny, you know, break the ice, start off with a little joke. Unfortunately as with all good humor there is a element of truth in it. The Golden State is nearly lost now. America has a preview of what will happen to the rest of the country if disasterous leftist policies are allowed to become national law. Hear this; what has happened to California can't be blamed on big business or the evil, undeserving rich.

McClintock says "it's with a sense of déjà-vu that I have every day on the House floor as I watch the same folly and blunders that wrecked California now being passed with reckless abandon in this Congress."

We all remember the Golden State in its Golden Age. He reminds us; "A generation ago, California spent about half what it does today AFTER adjusting for both inflation and population growth."

Without reservation we can agree with Congressman McClintock and say California once had the finest highway system in the world and some of the finest public schools in the country. At one time California offered a FREE university education to every resident. California had an unemployment rate consistently below the national rate and its economy was nearly recession-proof.

He goes on to point the finger at the the 800 pound gorilla. "One thing - and one thing only - has changed in those years: public policy. The political Left gradually gained dominance over California's government and has imposed a disastrous agenda of radical and retrograde policies that have destroyed the quality of life that Californians once took for granted."

The collapse of California's economy can be tied to 3 critical events:
1. the rise of environmental Ludditism
2. the abandonment of constitutional checks and balances that once constrained spending and borrowing;
3. the rise of rule by public employee unions.

Environmental Ludditism was ushered in by a radical new-age nut named Jerry Brown as governor of the state - yes, the very same Jerry Brown who is running again in 2010 (to finish the job???)

Brown's vision for California was something other than a shining example of an American success story. Basically it was European socialism and Russian centralized planning, both unmitigated disasters as we are now seeing. As governor Brown infused his warped vision into every aspect of public policy that has dominated the disastrous direction of California through both Republican and Democratic administrations.

Jerry Brown's actions led directly to California's devolution:
- cancelled the state's highway construction program
- cancelled long-planned water projects, conveyance facilities and dams.
- established the California Energy Commission that blocked approval of any significant new generating capacity.
- enacted volumes of environmental regulations that created severe impediments to home and commercial construction, empowering an incipient no-growth movement

The second problem is structural: the collapse of the checks and balances and other constitutional and traditional constraints on government spending and borrowing.

- state take-over of public education
- legislative response to Proposition 13 led to the essential state take-over of local governments
- removed the governor's ability to make mid-year budget corrections
- Proposition 111 gutted the Gann Spending Limit that had held increases in state spending to inflation and population growth
- tax increases by Pete Wilson in 1991 and Arnold Schwarzenegger in 2009

McClintock continues... "The third factor that also can be traced back to the 1970's was the radical transformation that took place in the nature and power of the state's public employee unions. Until that time, state law prohibited public employee strikes against the public and prohibited collective bargaining or closed shops."

- collective bargaining acts gave public sector unions all the rights and powers of private sector - - unions - but without any of the natural constraints on private sector unions.
- political expenditures by public employee unions exceed all other special interest groups
- radically escalating personnel costs and radically deteriorating performance

The Congressman concludes:
"That's the state's predicament in a nutshell. California's borrowing costs now exceed the budget of the entire University of California and it is increasingly likely that it will fail to find lenders when it must borrow billions to pay its bills at the end of this month. Ignoring dire warnings, Gov. Schwarzenegger and legislators from both parties earlier this year imposed the biggest state tax increase in American history.

And I can assure you that the Laffer curve is alive and well. In the first two months after the tax increase took effect, state revenues have plunged 33 percent.

Sadly, California has reached the terminal stage of a bureaucratic state, where government has become so large and so tangled that it can no longer perform even basic functions.

Congress is now enacting the same policies at the national level that have caused the collapse of California. So whistle past this cemetery if you must, but remember the medieval epitaph: "Remember man as you walk by, as you are now so once was I; as I am now so you will be." The good news is there is still time for the nation to avoid California's fate. If anything, the collapse of California can at least serve as a morality play for the rest of the nation - unfortunately in the form of a Greek tragedy."




CW

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