Friday, January 16, 2009
A letter to Governor Schwarzenegger
A small businessman writes a letter to Arnold, pointing out one of the no doubt many ways in which California is burdening its employers and wasting the money of its taxpayers.
You can see that our rates in California are double that of any other state, and more than 6 times our average. Further, the California rate could actually be higher by our experience, as 6.2% is the cap. By the way, we did a study a while back as to why our Arizona rates were so high. It turned out most of the claims were from people who had recently moved from California, and grew up under the California system.
It's the culture, stupid. Teach people to look for a handout and they will, whether they need it or not.
Related item: How big is California's budget deficit? California's deficit is larger than the entire budget of every other state except New York, and the gross national product of more than 100 countries.
13 Comments:
By 
, at
Fri Jan 16, 10:50:00 AM:
For those of us living in New Jersey, with it's own terrible deficit issues, this paragraph hits home particularly hard:
"There isn't a real will to hunker down until you have to," said Barbara O'Connor, director of the Institute for the Study of Politics and Media at Sacramento State University. "But it's reached the point where they don't have a choice. Polemics don't work."
We won't see a serious effort made to fix the fiscal issues the state faces, never mind the issues our towns face, until the situation becomes desperate.
By , at
Fri Jan 16, 11:09:00 AM:
I fear the entire nation, economically, is but a house of cards. Praying my faith in capitalism isn't foolish. Or moot.
By 
SR, at
Fri Jan 16, 11:25:00 AM:
Capitalism has nothing to do with CA's budget woes.
It is overweening statism at is zenith.
By , at
Fri Jan 16, 11:31:00 AM:
Unfortunately the conventional wisdom of they day is that these issues are solved by nationalizing various industries. Creeping socialism may be the root cause, as you suggest, but the cure seems to be in the form of less capitalism and more "statism".
By , at
Fri Jan 16, 11:35:00 AM:
For the last four years in a row, more people have been moving out of California than moving in. Fortunately, the net population is still going up due to higher birth rates and foreign immigrants.
Schwarzenegger has not helped anything. Ironically, the former Democrat governor, Gray Davis, was impeached because he implemented an increase in car registration fees that would have brought in an extra 6 billion a year in revenue. Davis was impeached in 2003. Do the math. California would have had another 30 billion-plus in revenue. The registration fee increase had approved by the California legislature, with enough Republican report to pass, to take effect whenever state revenues fell below a certain point. This was conveniently forgotten when Davis announced the fee increase was being implemented and there was a large public outcry. It all became his fault and he was recalled.
What we have in California is an Atlas Shrugged-style liberal government. More and more people receive public money and the public votes for those who keep the money flowing. Add to that massively underfunded pensions, swelling state bureaucracy, declining revenue base, rotten economy, collapsed housing market and you see something that could very well crash and burn.
By Brian, at
Fri Jan 16, 12:17:00 PM:
Most people don't know that California's unique in requiring 2/3 vote of the legislature to increase tax revenue. Ronald Reagan put a tax increase through in similar circumstances when he was governor, but the current Republican minority has said a combination of spending cuts and tax increases won't suffice, and no new taxes should occur.
California's Republican party is in a state of collapse, something that's been recognized nationally and probably hurts the party nationally. So I guess there's a tradeoff.
By , at
Fri Jan 16, 12:29:00 PM:
Taxes are a problem in California, as the Coyote blog letter TH linked to demonstrates, but this post is about a different subject altogether: abrogation of responsibility. The legislature has failed in it's duty, and the governor has too.
"Capitalism" is almost entirely beside the point, unless one wants to whine that businesses and business owners can't pay every bill forever, when by rights they should.
The state of the GOP in California and nationally is poor because, IMO, the voters have lost faith in the party as the party of fiscal responsibility.
Regardless though, until the legislature finds the "will to hunker down", as O'Connor put it, there will not be a solution of any sort.
Here's a prediction: some politician will see this crisis as an opportunity, and when he or she can make the case convincingly to the public that fiscal responsibility is critical to the future, that person will become governor and a national political force.
By Mrs. Davis, at
Fri Jan 16, 01:42:00 PM:
The rejection of the 2005 referenda demonstrated explicitly what years of electing Democrat legislatures had demonstrated implicitly; the people of California do not want fiscal responsibility, probably because they have no idea what it is.
After the election, Schwarzenegger accommodated them instead of resigning, leading to the present crisis. The people of California will not become fiscally responsible until they are hit between the eyes with a 2x4. And there is no assurance that will happen. That is the only way this ends and why I left the state.
No politician will make the case. Only Events can force the issue and some politician will be in office when it happens. That person or their successor will take advantage if the scales fall off the eyes of the Californians. Otherwise, they will be as helpless as Swarzenegger and California will continue its descent into a banana republic.
By , at
Fri Jan 16, 02:59:00 PM:
California is estimated to be 40 billion dollars in the hole over the next two years and the Democrat budget plan had 4 billion dollars worth of cuts and 4 billion dollars worth of tax increases. It was well worth it for the Republicans not to cave - it was pointless.
It won't be budget cutting until they get rid of all the patronage jobs like Carol Migden on the 'Waste Management Board' for $133,000 a year to do nothing.
By Dawnfire82, at
Fri Jan 16, 04:14:00 PM:
"For the last four years in a row, more people have been moving out of California than moving in. Fortunately, the net population is still going up due to higher birth rates and foreign immigrants."
Because the exiting productive adults are the same thing as the incoming babies and unskilled Mexicans. (and their babies, which outnumber the native babies in many if not moat parts of the state; visit Salinas to understand)
California is doomed.
By , at
Sat Jan 17, 08:30:00 AM:
With giant pork packages coming, one after another, and being called "stimulus", don't you wonder how long it is before our currency degrades even further and worry that the nations fiscal mess is going to look like California's?
Obama said last week that the deficit will "exceed $1.2 trillion" in 2009, but he didn't give out any sort of number. Carrying TH's helpful comparison idea to that level, we see that at $1.2 trillion, we're sporting a deficit in 2009 bigger than the 2007 GDP of countries as large as India, South Korea and Australia. If it goes as high as $1.4 trillion, our annual deficit will be in the neighborhood of the GDP of Canada or Spain. At even the lower number, only 10 countries have bigger GDP's. And, this terrible extortion/borrowing from our teenagers is going to be spent on stuff like "wind power" projects, public employment, and welfare payments (euphemistically called "tax cuts").
Man, wouldn't it be great if we had another party in this country?
By TigerHawk, at
Sat Jan 17, 09:26:00 AM:
The dollar will be in trouble unless we do something to reassure the rest of the world that we can reduce our long-tail liabilities. The only way to do this is through entitlement reform, which means (1) substantially delaying the age of eligibility for Social Security benefits, which with the stroke of a pen would cut trillions off the long tail, and (2) figuring out how to deliver healthcare less expensively over the long term. The good news is that Barack Obama is signalling that entitlement reform is part of the program. Let's hope the House Dems do not stop him.
By , at
Mon Jan 19, 10:32:00 AM:
