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

by CalWatchdog Staff | December 10, 2012 8:11 am

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[1] 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[2], “the Labor Department[3] 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[4] claimed that it forgot to include[5] California in their jobs report, according to the Business Insider[6].

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[7],” rarely reported, which provides an accurate look at how many people are really unemployed[8].

According to the U-6[9], 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[10] 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[11] and summary analysis[12] 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[13].

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[14] 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[15] 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 [16]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[15] 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[17] 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.

  1. he latest monthly jobs report:
  2.  to The Associated Press:
  3. Labor Department:
  4. BLS:
  5. forgot to include:
  6. Business Insider:
  7. U-6:
  8. unemployed:
  9. U-6:
  10. reported:
  11. financial statement:
  12. summary analysis:
  13. were short by more than 213 percent:
  14. recently wrote:
  15. explained:
  16. Conning’s analysis :
  17. City Journal essay by Victor Davis Hanson:

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