Calif. economy: Ya sure, you betcha, we’re fine!

Dec. 10, 2012

By Katy Grimes

The latest barrage of “news” reports that California is enjoying an economic recovery is evidence that this is most likely being driven by Gov. Jerry Brown’s office.

Ya sure, you betcha, we’re fine.

Given that the California Department of Finance works only for the governor, the pressure is on to provide numbers and information which presents a picture favorable to the governor.

This was never more clear than when a report showing the unemployment rate in the U.S. fell below 8 percent in order to boost to President Obama’s re-election campaign right after his first dismal debate performance with Republican challenger Mitt Romney.

It was the numbers from California that gave the boost needed.

Conveniently, the Labor Department reported in Sept. that the nation’s jobless rate improved to 7.8 percent. The unemployment rate had not been that low since Obama took office in January 2009.

The latest monthly jobs report was released by the Bureau of Labor Statistics the first week of October. The unemployment rate miraculously decreased to 7.8 percent in September, the BLS reported.

According to The Associated Press, “the Labor Department said weekly applications fell by 30,000 to the lowest level since February 2008. The four-week average, a less volatile measure, dropped by 11,500 to 364,000, a six-month low.

But the real reason for the massive drop in jobless claims is because the BLS claimed that it forgot to include California in their jobs report, according to the Business Insider.

It was a perfectly-timed goof, just in time for the election.

Despite the positive spin used by the White House and compliant media, these are the facts: Fewer jobs were created in in America during September than in August, and fewer jobs in August than in July.

‘Uff-dah’ – we’re not fine

The real unemployment rate would be closer to 11 percent if it weren’t for all of the people who have stopped looking for work and completely dropped out of the labor force. And the really real unemployment rate is a separate government number called the “U-6,” rarely reported, which provides an accurate look at how many people are really unemployed.

According to the U-6, California has a 20.3 percent real unemployment rate.

The national results of the last four years are a tough pill to swallow: 23 million Americans are struggling to look for any work, nearly one in six are living in poverty, 47 percent of Americans do not pay any income tax, and 47 million people are dependent on food stamps to feed themselves and their families.

And California’s real debt is 10 times what Brown and the state Democrats report.

California’s real debt is not just the measly $16 billion that Gov. Jerry Brown and state Democrats bandy about; California’s real debt is $617 billion.

“California again trumped other states with a $617 billion debt,”  State Budget Solution reported in August. “California’s debt is more than twice the size of New York’s state debt, and New York has the second largest total debt burden in the nation.”

The reason for the disparity in numbers? “Unfunded public pension liabilities make up more than half of all state debt,”according to State Budget Solutions. The pension liabilities of the total debt represent the $2.8 trillion owed to public pension systems “as a result of years of skipped payments, borrowed funds, and inaccurate discount rate assumptions.”

States Highest Total State Debt (in thousands) States Lowest Total State Debt (in thousands)
California $617,620,709 Vermont $5,846,189
New York $300,066,114 North Dakota $6,116,162
Texas $286,999,196 South Dakota $6,536,680
Illinois $271,111,148 Wyoming $6,927,767
New Jersey $258,034,922 Nebraska $7,829,117

What’s more, the 0.3 point improvement in the unemployment rate from August to September is, thus far, the greatest improvement in the unemployment rate this year. The year began with an 8.3 percent jobless rate.

Refuting the Gov’s numbers

The State Controller paints a different picture.

Controller John Chiang released the financial statement and summary analysis showing that budget projections were more than $800 million short. Chiang’s office said that this latest goof is 10.8 percent off.

Corporate tax revenues were even worse. The Controller reported that corporate tax revenues were short by more than 213 percent.

Ya sure. No, we’re not fine.

The reports about California’s recovery are coming from California’s state universities, or university programs receiving funding from the state.

California – “fiscal hellhole”

“Two factors determine whether a state makes this elite list of fiscal hellholes,” William Baldwin recently wrote in Forbes. “The first is whether it has more takers than makers. A taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector.”

“Let us give those takers the benefit of our sympathy and assume that every single one of them is a deserving soul. This person is either genuinely needy or a dedicated public servant or the recipient of a well-earned pension.

But what happens when these needy types outnumber the providers? Taxes get too high. Prosperous citizens decamp. Employers decamp. That just makes matters worse for the taxpayers left behind.”

Baldwin explained that the second element in the death spiral list is a scorecard of state credit-worthiness done by Conning & Co., a money manager known for its measures of risk in insurance company portfolios. “Conning’s analysis focuses more on dollars than body counts. Its formula downgrades states for large debts, an uncompetitive business climate, weak home prices and bad trends in employment.”

Baldwin explained California’s place on the list: “It’s easy to see how California got on our list. It has pampered a large army of civil servants while using every imaginable trick to chase private-sector jobs away, the latest being a quixotic scheme to reduce the globe’s atmospheric carbon.  A City Journal essay by Victor Davis Hanson notes that the state spends $10 billion a year on entitlements for illegal aliens.”

Numbers don’t lie — people lie

What economic recovery? The numbers don’t lie. But the lies are adding up to more and more reasons to move to right-to-work states, low tax states, and states that celebrate economic freedom. California is a fiscal hellhole, ya sure, you betcha.

18 comments

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  1. SeeSaw
    SeeSaw 10 December, 2012, 11:06

    What a bunch of BS! Name calling of people who worked all their lives is just that! I worked all my life–I obey the laws–I give to others and am very generous with my family members who are all in the private sector. Don’t you dare call me and my ilk Takers! Enough is enough–we need to work together on any recovery!

    Of course we are not fine–there are millions of people out of work–thanks to the titans of Wall Street–private industry. We need infrastructure and the jobs that would come along with such.

    Reply this comment
  2. Tax Target
    Tax Target 10 December, 2012, 11:17

    SeeSaw don’t count on Kalifornsky.. follow my lead and look elsewhere. You will not relief here!

    Reply this comment
  3. StevefromSacto
    StevefromSacto 10 December, 2012, 11:34

    Thought the expression was: “No good deed goes unpunished.”

    I guess at the Lapdog it’s “no good news goes undenied.”

    If you think that California’s climbing out of the recession and making economic progress really provides “more and more reasons to move to right-to-work states, low tax states, and states that celebrate economic freedom,” there really is no hope for you. I’d suggest you take your own advice and kindly move elsewhere. Mississippi would be a fine choice.

    Reply this comment
  4. Sean Morham
    Sean Morham 10 December, 2012, 12:13

    My projections: state will have $5.5 billion deficit for next year. After that, my projections are back to $10 billion plus yearly. On top of that, Pension debt is still there. A significant miss against forecast on sales and corporate taxes means that we are not coming out of recession. Many counties and some cities are in bad shape as well. This is going to be a wild ride. I can see eventually and exit tax on property sold in Cal, and this would apply to gov t retirees as well. Nothern states are getting killed by retirees(including the well off public sector) moving to no income tax Florida so that could happen elsewhere first.

    Reply this comment
  5. NTHEOC
    NTHEOC 10 December, 2012, 13:12

    You must really cry yourself to sleep every night Katy!!!!! You are the most negative person I have ever heard of.

    Reply this comment
  6. Everybody's doing it
    Everybody's doing it 10 December, 2012, 14:13

    The public parasites are digging deeper for more blood, they will ride it until the victim dies, then try to jump off onto the next victim.

    Reply this comment
  7. NTHEOC
    NTHEOC 10 December, 2012, 14:25

    Everybody’s doing it, you sound like someone who would consider themselves a VICTIM!!! That kind of thinking also tends to follow losers!!! Like you!!

    Reply this comment
  8. Rex the Wonder Dog!
    Rex the Wonder Dog! 10 December, 2012, 16:27

    SeeSaw says

    I worked all my life–I obey the laws–I give to others and am very generous with my family members who are all in the private sector. Don’t you dare call me and my ilk Takers!
    OK, now you’ve done it, you gave seesaw a myocardial infarction……I can see her now, her face is blue from her top going off 🙂

    Reply this comment
  9. Rex the Wonder Dog!
    Rex the Wonder Dog! 10 December, 2012, 16:29

    Steve from Sacto says:

    If you think that California’s climbing out of the recession and making economic progress…

    Climbing out of depression?? Our state revenues from taxes has been almost the same for the last 5 years- going on 6 years- when this depression started….Stevie, you say this every year, you and seesaw, that the state is improving, it is not, it has been stagnant at BEST.

    Reply this comment
  10. Rex the Wonder Dog!
    Rex the Wonder Dog! 10 December, 2012, 16:31

    Sean Morham says:

    My projections: state will have $5.5 billion deficit for next year. After that, my projections are back to $10 billion plus yearly.

    Ill second Sean’s prediction and add that in 4 years the “temporary” tax hikes will not be able to sunset b/c there is not enough revenue.

    Reply this comment
  11. Rex the Wonder Dog!
    Rex the Wonder Dog! 10 December, 2012, 16:33

    NTHEOC-I have a serious question for you.

    Since pensions are considered deferred compensation, would that mean the salary/pension earned in retirement is subject to CA income taxes, as it is compensation paid from here- CA, here for work here-CA, that was only deferred????

    Reply this comment
  12. stevefromsacto
    stevefromsacto 10 December, 2012, 17:27

    Interesting column providing another reason for the growing irrelevance of the rabid right:

    “From Franklin Roosevelt’s advice that the only thing Americans once had to fear “was fear itself,” to Ronald Reagan’s “morning in America” theme, to Bill Clinton’s “the man from Hope,” to Barack Obama’s “hope and change,” the overarching theme of American political campaigns has long been the triumph of hope over fear.

    “With that in mind, last week’s Public Policy Institute of California’s statewide survey of Californians offered some interesting insight as to why Republicans may have fared so poorly in this state in last month’s elections. The party these days has what might be called a hope deficit…..no one wins elections by being dour.

    “Perhaps the most revealing question asked in the PPIC poll was one that gauged Californians’ long-term views about the future of their state. Asked whether they felt California would be a better place to live in 2025 or a worse place to live, 42 percent of adults gave the optimistic answer, compared with 28 percent who said it would be a worse place. An additional 23 percent said there would be no change, and 8 percent offered no opinion.

    “By gender, by race and ethnicity, by region, by age group, by income category — in every subgroup either a plurality of respondents felt better times are ahead for California or opinion was at least evenly divided. Women (44 percent), Latinos (47 percent), San Francisco Bay Area residents (45 percent), 18-34-year-olds (48 percent) and those with incomes between $40,000 and $80,000 a year (46 percent) were the most optimistic. Opinion among whites (37-37), those 55 and older (36-35) and with incomes above $80,000 (35-34) was divided.

    “But there was one breakdown by subgroup that showed a marked divide on the hope factor. By a 57-17 margin, Democrats felt California will be a better place a dozen years from now. Republicans, by a margin of 54-23, believe the state is headed downhill.”

    Keep it up, Katy!

    Reply this comment
  13. SeeSaw
    SeeSaw 10 December, 2012, 19:15

    I live in California, Tax Target–and very proudly! Enjoy yourself in that Red-neck place you are going to.

    Reply this comment
  14. SeeSaw
    SeeSaw 10 December, 2012, 19:20

    Its not when and where you earn the money, Rex. Its when and where you are when you receive it–the Federal Government and Clinton saw to that. I personally believe that retirees who earned the money here, and leave the state, should pay state income taxes here. But, you can’t over-ride federal law.

    Reply this comment
  15. jimmydeeoc
    jimmydeeoc 10 December, 2012, 20:30

    Steve from Sacto…..

    Why not provide the original link to the tripe you cut ‘n posted?

    Moreover, you are making the mistake I see many Democrat pundits making as of late. The argument goes like this: “Well, polling shows that a majority of people think it’s a good idea to “tax the rich” and they support the President.” Therefore, the thinking goes, President Pander should proceed.

    News for you, Stev-o….just because something polls well doesn’t mean it’s good policy.

    And what if those dour Republicans actually ARE right? What then? Clutch those unicorns and moonbeams ever tighter?

    Reply this comment
  16. SeeSaw
    SeeSaw 10 December, 2012, 20:47

    Why don’t you outline what you consider a good policy and tell us why it would work, JD. Tell us how to get those 25,000,000 people back to work.

    Reply this comment
  17. jimmydeeoc
    jimmydeeoc 11 December, 2012, 09:55

    Well, see saw, you COULD have implemented a good portion of Simpson-Bowles for starters.

    Unfortunately, as you recall, your “President” immediately unzipped his drawers and loafed on it.

    Legislators are now trying to sweep away the dried fecal matter from its pages and trying to figure out how much of it The One might countenance…..

    Reply this comment
  18. Marten purdy
    Marten purdy 13 December, 2012, 06:27

    Mitt Romney
    This guy is not only incompetitent, he’s the biggest flip-flopper in politics. And this doesn’t mean his position “evolves” over time or as the situation changes. Mitten’s position changes depending on which state he happens to be in at the time. No nuance about this guy. He’s one of those “dazzle them with bullshit” kind of politicians, about as cardboard and phony as you will find in politics.

    Reply this comment

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