Democrats dreaming

MAY 10, 2010

California’s Assembly Democrats want you to be part of the state’s budget solution, which is how they are touting a series of live budget forums across the state. One took place Saturday in San Diego and the next one is scheduled May 13 in the Bay Area city of Albany.

While the California Democratic Caucus is touting these forums as a chance to listen to the concerns of average California voters, it’s clear that caucus members only want to listen to certain ideas. For instance, the Democratic Assembly’s discussion of the forums on its website has a rather telling preamble:

“California continues to face unprecedented budget challenges. Like only two other states in the nation —- California requires a two-thirds vote of the Legislature to pass a budget. As the majority party, Democrats are willing to take responsibility for a majority vote budget. The public should have the opportunity to hold the party in power accountable for the policy decisions they make.”

In other words, the state’s Democrats want you to show up to their town hall and tell them how important it is to pass an initiative stripping away the two-thirds budget vote requirement, so that they will have an easier time passing budgets with their tax-and-spend philosophy firmly in place. This ultimately will lead to the removal of the two-thirds vote requirement for tax increases. Democrats in California believe that the state’s problems stem entirely from a lack of revenue and tax rates that they always find to be too low.

I can’t imagine anything that would be more destructive to California than giving the majority party unchecked power to raise taxes. Most of the public understands this, which no doubt explains the Democratic forums, which, as one Republican Assembly member warned me, will no doubt be filled with public-sector union members who form the Democratic Party’s activist base. They gain the most by higher taxes, and union rallies have been less-than-subtle on that point.

The most powerful members of the Legislature seem to seriously believe that California is a lean, well-run state that faces massive budget deficits, pension liabilities and other fiscal problems simply because the middle class and wealthy do not pay enough in taxes, even though recent surveys show the state near the top of the taxing-and-spending heap.

The Economist recently weighed in with a bizarre unsigned article titled, “Looking for Waste: Easier Blamed Than Found.” It relied on one statistic showing that California has fewer public employees per 10,000 residents than many other states. It’s hard to know where to begin with that tangential argument. Does anyone outside England (or at least outside the Economist’s Los Angeles office, which produced the piece) really believe California to be an efficient model of limited government?

Actually, the problem in California is that government is too big, too wasteful and too punitive toward private business. The only times Democrats aren’t demonizing the private sector is when they are trying to tap it for even more money to pay for vital services, such as $100,000 pensions and free health care for retired state employees.

How our state ranks

San Diego anti-tax activist Richard Rider recently wrote an article detailing California’s grim statistics. It has the third worst state income tax, the highest sales tax rate, one of the highest corporate income tax rates and ranked 48th nationwide in business climate. It’s near the top in most areas of taxation. No wonder California has the third highest unemployment rate in the country.

Rider reveals other interesting stats: California requires more occupational licenses than any other state, has more welfare recipients than the next seven states combined, yet has among the highest paid and pensioned public employees in the nation. The state’s electricity costs are more than 37 percent above the national average and it was named by the nation’s CEOs as the worst state in the nation to do business. These statistics reveal why the moving vans keep heading away from this state, despite its natural beauty and wonderful climate.

I met recently with the California Manufacturers & Technology Association, which pointed to the devastation of the middle class caused by state government policy. Between 2001 and 2008, the number of jobs gained versus lost were close to a wash. But the average pay of lost jobs was $69,000, while the average pay of gained jobs was $43,200. The state —- thanks especially to its draconian environmental policies —- is destroying its industrial base and replacing high-paid blue-collar jobs with low-paid service jobs.

In the past nine years, California has lost 34 percent of its industrial jobs, from 1.873 million to 1.239 million. Whereas, Missouri creates 105 new or expanded manufacturing facilities per million people, California is home to only 3.7 new or expanded facilities per million people, according to CMTA. State policies are sending the tax base elsewhere.

Who in their right mind would open a new manufacturing plant in California given the tax and regulatory climate? CMTA details the many sectors where California soared —- aerospace, car manufacturing, financial headquarters, etc. —- but which are now part of the state’s history; heavily subsidized “green jobs” will be no panacea.

CMTA President Jack Stewart told me that it costs a manufacturing firm 25 percent more to do business in California than in the other states, and that U.S. operating costs are 31 percent higher than in other industrialized nations.

When the economy rebounds, I doubt that the jobs will rebound quickly, given the cost differential. Defenders of the status quo note that not many businesses pick up roots and move elsewhere. True, but they do shift jobs elsewhere, expand in other states and outsource increasing parts of their operation. Think also of the many businesses that don’t ever get a start here because of the punitive climate and the attitude that government is the answer and the private sector is the problem.

Assembly Republican Leader Martin Garrick of Solana Beach released a list of the Democratic “solutions.” They want higher income taxes, new taxes on oil, taxes on the number of miles taxpayers drive, a new grocery store bag tax, sugar tax, home insurance tax and a tax on parking at work. Not to mention the new costs imposed by their government-run health-care plan and implementation of the state’s global warming law.

And now these same folks want you to show up and demand that they have complete control of the budget. I don’t blame you if you choose to stay home and sort out the sock drawer instead.

–Steven Greenhut