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California is a microcosm of Obama's domestic policies.

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California Grinds to a Halt

California is a microcosm of Obama’s domestic policies.

While the federal deficit skyrockets, many voters say, “At least Obama is doing something.” The implication, of course, is that the likely outcome of what he is doing is unknown.

But that’s far from true. Maybe Californians haven’t yet awakened to the national issue, but they’ve apparently smelled the state-wide catastrophe coming.

Tuesday, Californians went to the polls to vote on a series of ballot measures, all but one of which were either tax increases or budgetary shell games to reallocate funds to cover government’s inability to cut spending.  In the Orwellian fashion common in Washington, they were given pleasant-sounding names and descriptions like the “Lottery Modernization Act” or a measure to “increase the ‘Rainy Day’ budget stabilization fund.”

But even those progressive, tax-happy Californians, who have done in the past several years what Obama is trying to do to the country now, have had enough.  All five “fiscal” measures were soundly defeated, with an average “No” vote of 65%.  The sixth measure, Proposition 1F, which says that elected officials can not get pay raises while the state is running a deficit, passed with 74% of the vote.  

As if those numbers weren’t demonstrative enough of the tidal wave of voter revulsion, consider this: Proposition 1B, which would have increased education spending by $9.3 billion won in just three of California’s 58 counties, all around San Francisco, and only won those counties by an average “Yes” vote under 52%.  The other four fiscal measures lost in every county in California, and Proposition 1F won in every county in the state.

California has long been a leader in “progressive” policy, with a rapid acceleration in “tax and spend” government in recent years, and the results are in:  The state is facing a $21 billion budget deficit and, for several years in a row now, is losing population while having an unemployment rate increasing much faster than the nation’s.  Indeed, two chapters of the American Legislative Exchange Council’s recent edition of their State Economic Competitive Index discuss how California’s “progressive” policies have doomed it to the dramatic failure we are witnessing today.

Even the usual newspaper endorsements and threats by liberal politicians (among whom we must now include the Arlen Specter-like governor, Arnold Schwarzenegger) failed to sway voters.  Neither announcements of mass layoffs of government workers, nor standard “for the children” rhetoric about school budgets, nor fear-mongering about possibly having to release nearly 20,000 illegal aliens from jail were this time able to get through the bi-polar anger of California voters.

On one hand, we should congratulate California for getting one right, for finally forcing government to look for ways to cut spending. But we have to realize that California’s problems are primarily the responsibility of voters who consistently elect big-spending politicians and have consistently, for the three decades between the passage of Proposition 13 in 1978 and yesterday’s vote, rejected ballot measures which could have tamed government spending and the union power which together live like a mutant parasite on the economic body of the state.

As an LA Times article suggests, “Nearly a century after the Progressive-era birth of the state’s ballot-measure system, it is clear that voters’ fickle commands, one proposition at a time, are a top contributor to paralysis in Sacramento.” And while former Gov. Gray Davis piles on to the “it’s the voters’ fault” bandwagon, anyone serving in the dysfunctional state government still has the obligation to lead.  Instead, the Golden State is governed by public opinion polls, both indirectly (when politicians find out what will be popular before deciding what they believe) and, as yesterday, directly.

California led the way with higher fuel economy standards and more restrictive carbon emissions standards, and now they can’t compete with the rest of the country.  If the entire nation repeats those mistakes, we won’t be able to compete with the rest of the world.

California led the way with extremely “progressive” tax rates and is losing employment and population rapidly.  If America’s federal income tax gets more progressive, rich Americans will, one way or another, find ways not to pay, even if it means cutting their own incomes or leaving the country. And as California can attest, the ultimate victims of that are not the rich.

The same applies to corporate tax rates: California’s is very high, so its business formation is very low. If the Obama administration continues to attack American corporations, you won’t see just outsourcing; you’ll see entire companies move overseas and new would-be-American companies form overseas, costing American workers their jobs and costing the Treasury billions of dollars in revenue.

And California led the way in blocking union reform, such as 2005’s defeat of Proposition 75, which would have required that a union get permission from a member before using his dues for political contributions.  The Obama administration, filled with union lackeys, is already working feverishly to enhance union power at the expense of everyone but union leaders and Democratic politicians. Again, California is the poster child for what not to do if you want to be able to get a job or buy an affordable product, but President Obama seems hell-bent on copying California’s failed policies.

Yesterday’s smackdown of California’s tax-raising, big-spending ballot measures is a glimpse into the future of our entire nation.  Yes, voters will eventually come to realize that government has gotten out of control. But, if the lessons of California aren’t adequately and quickly learned nationwide, the realization won’t happen before the United States of America has fallen into a morass of debt and loss of economic freedom which will seem more appropriate to a banana republic than to history’s greatest example of the benefits of liberty and capitalism.

Written By

Ross Kaminsky has been a professional derivatives trader for over 20 years. Ross is a fellow of the Heartland Institute and writes about political economy and current events at Rossputin.com. He also contributes to blogs for the National Taxpayers Union and FreedomWorks among others.

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