David

Karki

Read David's bio and previous columns here

June 3, 2009

As California Goes, So Goes the Nation . . . Straight to Financial Ruin

“As California goes, so goes the nation.”

The phrase was coined in recent years, due to California being so big that whatever policies they adopted had a tendency to ripple through the country. Initially, this was in a more conservative direction, most famously in Proposition 13 in the late 1970s, which capped property taxes and held back the growth of government for a time.

In more recent times, it's been in a very liberal direction, especially on social issues from gay marriage to medical marijuana.

And now, it's due to California having spent itself to the brink of total insolvency. The state faces a deficit of more than $20 billion, as the heavily liberal state assembly has spent and spent and spent to the point where there simply is no more left to spend. Naturally, they've had to tax and tax and tax to pay for it – so much so that people have been fleeing the state in droves for friendlier climates like Nevada, which has no state income tax, resulting in less revenue for California.

The self-inflicted crisis has finally come to a head. Governor Arnold Schwarzenegger, who was elected following the recall of Gray Davis, has proven to be a girly man instead of a terminator when it comes to stopping the runaway, out-of-control spending by the parasitic lobbies that are sucking the life out of their host body. He has been completely co-opted and become precisely that which he won office promising to, well, terminate.

Only the state constitutional requirement of a two-thirds super-majority to pass a budget, and barely enough Republicans to keep the left two votes short of that threshold, have kept things from becoming much, much worse.

On Tuesday, May 19, voters defeated a series of five ballot initiatives that would have done an end-run around that block. They lost huge, by an average of 2-to-1, in spite of proponents – meaning everyone who'd have been on the receiving end of all the additional spending – shoveling $30 million into advertising, a 10-to-1 advantage over opponents.

So California is at the point where spending will simply have to be cut more than $20 billion to even things up. This stands to be a very ugly process, with anyone whose program is on the chopping block and their union screaming about it and disingenuous politicians deliberately cutting essentials like firemen and police while saving their pet programs, and then claiming that was the fault of taxpayers not forking over more of their hard-earned salaries.

Worst of all, there is the specter of President Obama possibly bailing out California with federal funds, thus putting us all on the hook for the lunacy of the spend-a-holic left coast liberals. It wasn't a coincidence that Governor Schwarzenegger was in Washington D.C. on the day the initiatives died. (And if California isn't enough for you, New York is in the on-deck circle as the small number of wealthy people with huge tax bills that fund a big share of state government are finally starting to flee there as well.)

Think about it: If Chrysler and GM are “too big to fail,” how can California and New York not be? And if there's one thing clear in Obama's mishandling of the mortgage and credit card industries, it's that he lives to punish the responsible in order to reward the irresponsible, perverse incentives and moral hazard be damned. Not to mention that he's already threatened to withhold “stimulus” funds from California unless they upheld union contracts that they were trying to scale back to help prevent this fiscal Armageddon.

So clearly, Obama is both misguided and authoritarian enough that we can't put a bailout past him.

For our part, we need to learn from California, for they are simply further along the same road the nation is traveling. America, with entitlements plus existing debt plus Obama's massive new spending, is tens of trillions in debt. And a day of reckoning like that which California now faces is coming very soon, with the imminent retirement of the Baby Boomers.

There simply isn't enough money in the universe to pay for all this spending, and Obama delusionally thinks that taxpayers' wallets are bottomless and inexhaustible. One way or another, this is going to end. It has to end. Just like California, we'll either have to forcibly cut spending big-time or face total insolvency.

The question is whether it will be in a cataclysmic collapse as we race to the precipice fully in denial that it exists, or in stepping back from edge of the cliff, having seen one state already fall off it and learning our lesson from their recklessness.

Either way, when those who have become so addicted to other people's money for so long are finally cut off, the withdrawal symptoms will be severe. I can easily picture protests and violence. It could well tear at the very fabric of the nation, just as stopping services and payments to illegal immigrants or welfare recipients could result in significant unrest in California.

But first we'll have to see how California deals with this and pray that Obama doesn't allow the disease to spread beyond the quarantine that state borders currently provide.

As goes California, so goes the nation. Whether that's the right direction or straight to financial ruin, we're about to find out.

© 2009 North Star Writers Group. May not be republished without permission.

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