Has California been saved?

Krugman - wikipediaApril 8, 2013

By Steven Greenhut

SACRAMENTO — Ever since California’s voters approved the Prop. 30 sales- and income-tax increase on the November ballot, liberal commentators have been gloating about the resurgence of the Golden State after many years of predicted doom and gloom. Their evidence: Higher taxes seem to have cleared up the state’s budget deficits.

As New York Times columnist Paul Krugman wrote recently, “California isn’t a state in which liberals have run wild; it’s a state where a liberal majority has been effectively hamstrung by a fanatical conservative minority that, thanks to supermajority rules, has been able to block effective policy-making.”

Krugman blames the “radical right-wing” for California’s problems, claims that the school system — which captures 40 percent of the state’s general fund plus local bond initiatives — is insufficiently funded (thanks to those evil right-wingers again) and believes that all is well now that “Mr. Brown [is] free to push an agenda of tax hikes and infrastructure spending … .”

It’s odd to blame Republicans in a state where they have had only minuscule power for at least a decade and even weirder to suggest that California’s milquetoast GOP is beholden to the radical right. The real questions: Has California been saved? Are higher taxes, more regulations and massive debt spending on public works the answer for the rest of the country?


California still has a great future, but we need to be realistic about its problems rather than embrace this “California is resurgent” myopia from ideologues pushing a big-government, union agenda.

For starters, California is far from being saved. All that has happened is a temporary elimination of the deficit on paper. That can quickly change and the state is still living off of borrowed money. Longer term, many businesses will move. They’ll probably leave their headquarters here because this is where the CEOs like to live, but job growth and expansion will take place elsewhere. That’s already happening.

California’s dominant Democrats can now raise taxes, float debt and expand government at will. Republican “obstructionism” forced the state’s liberal leaders to control themselves, but that control is over. Every hare-brained idea will have at a high likelihood of passing. Also, Democrats already are pushing a host of new taxes and proposals that will make it easier for local officials to raise taxes. So the taxing and spending has just begun.

Of course, to Krugman and other leftists, that’s the goal. As William Anderson of Frostburg State University in Maryland writes, “The fact that California has the highest taxes in the country, has a virulent anti-business governmental culture, and has rules that increase the cost of just about everything has nothing to do with it. After all, in Wonderland, higher costs translate into more spending, and more spending creates more wealth, so these ‘problem’ to which Krugman refers actually are opportunities for more government spending, which means a brighter future.”

Note that these massive infrastructure projects — most of which are needless — will saddled the state with a crazy level of debt. Gov. Jerry Brown, who during his first time as governor adopted a “small is beautiful” approach that halted infrastructure projects, is now pushing obscene projects such as High Speed Rail, which is now even opposed by the author of the rail initiative because the project doesn’t live up to its original promise. Brown also is pushing a Delta tunnel project — something that will cost tens of billions of dollars to change the flow of the Delta to save a tiny endangered baitfish known as the Delta Smelt.

Krugman skirts over the obvious bigger issues. The state’s public schools are poor performers thanks to the lock that the California Teachers Association has over the school system. There used to be a time when liberal writers cared about poor kids, but no more. They rather defend the bureaucrats and the union officials that put their job protection above education.

Krugman claims that the right wing has invented a “new line of attack” — i.e., claiming that “liberal big spending and overpaid public employees were bringing on collapse.”


But look at bankrupt Stockton. That city is decrepit largely because it spent most of its money on absurd levels of compensation for its workers and could no longer provide crucial services. Stockton may have taken it further than most, but it exemplifies the situation throughout California, which faces a half-trillion-dollar unfunded pension liability, according to a study by Stanford University (obviously run by right-wingers!).

Then there’s that little thing called freedom. California ranked as the 49th freest state in the union in a new Mercatus Center study. As the authors noted, “California not only taxes and regulates its economy more than most other states, but also aggressively interferes in the personal lives of its citizens.”

This isn’t to say that California is hopeless. I have no intention of leaving. But despite some good news on the revenue front, the state has abundant problems that need to be addressed. California may be a model for those who believe that most other states have not sufficiently copied the unsustainable welfare-state models of Western Europe, but it should offer warnings for everyone else.

Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Write to him at [email protected]


Write a comment
  1. Hondo
    Hondo 8 April, 2013, 09:22

    The fact that Kali has the worst rates of unemployment, poverty and welfare in the country, don’t phase this mans rants. He is just another Baghdad Bob.

    Reply this comment
  2. fish
    fish 8 April, 2013, 10:08

    It’s odd to blame Republicans in a state where they have had only minuscule power for at least a decade and even weirder to suggest that California’s milquetoast GOP is beholden to the radical right.

    Team Dem needs republicans much like the inner party needed Emmanuel Goldstein in 1984. They are simultaneously piteously weak and craven yet incredibly powerful with purely evil intent and always thwarting the best outcome of Party policy. A ruling party always needs a foil upon which all party failures can be blamed.

    So lets celebrate our new and happy lives under the guiding hand of the California Democratic Party!

    Hey Teddy did you hear that the chocolate ration was raised to 5 grams this month?!

    Reply this comment
  3. Paul
    Paul 8 April, 2013, 10:23

    He’s a moron just like the democrats or Kommiecrats of Kommiefornia nothing will change until they leave office and they stop giving handouts to illegal aliens and start taking care of the working class citizens…and get rid of the tight regulations is this communist state…

    Reply this comment
  4. us citizen
    us citizen 8 April, 2013, 10:51

    CA is one big freaking mess. I agree…..nothing will actually get done to help this state until the dems lose a lot of power along with the unions. Oh and dont forget all the illegals here, just sucking the life out of this state. I swear I have crossed the border and am living in mexico lately. Im getting to the point that if you cant speak English in front of me, I just might explode. And then they give me a dirty look for expecting it in my own country. Grrrrrrrr

    Reply this comment
  5. stolson
    stolson 8 April, 2013, 11:12

    If Krugman says it, or says anything–believe the opposite. He is from the old Socialist/Communist school of thinking. He is an egghead.
    CA cannot keep taxing anything that moves. The staggering number of illegals here and all those coming for welfare and social programs will really cost this state a big big bundle in the next year.
    Obamacare will hurt too. People who want to be employed, and cannot find work, will by necessity leave. Retail and fast food, plus other low end type set ups are surviving right now. The EBT program has exploded and corporate cronyism there (JP MORGAN) allows them a big profit–so govt goes hand in hand with this. The USDA has expanded due to all the numerous programs now in efect. It is a job producer!
    The cost of keeping the employment specialists to employ the welfare recipients is also big. Keep adding all this up with the unfunded $$$$$pensions, the 420 agencies (cut in half already and save, please!), the myriad perks and bloated public service sector salaries, and CA will go begging soon for help.

    Reply this comment
  6. BobA
    BobA 8 April, 2013, 11:17

    Krugman is a Keynesian economist who believes that the best way to grow an economy is through government spending. Keynesians believe that debt and deficits don’t matter and it’s up to the government to stimulate economy. Never mind that the Keynesian economic model is failing and has failed everywhere and everywhere it has been tried without exception. Keynesian economics is rooted in Marxist-Leninist ideology.

    By Keynesian reasoning, higher taxes equals greater prosperity. Krugman would therefore conclude that Stockton went bankrupt because taxes were to low and the way for other California cities to avoid future bankruptcies is to raise taxes.

    Reply this comment
  7. stolson
    stolson 8 April, 2013, 11:43

    Krugman and his ilk believe a stimulus will help the general economy(big govt)–so far the stimulus has helped the bankers and those who are big contributors to the Dems (they see this as an Investment on their money).
    If we look at where most of it has gone, it hasn’t been to creating jobs at home. That has not been a priority. CA is not in good shape.
    If families keep getting hit with higher taxes, there is less available money to spend after housing, utilities, food, clothing, and other items.
    This is not good for businesses. What doesn’t he understand about the old tired, worn out Communist theme of the struggle between 2 classes; the rich vs the poor etc. Some say CA is Greece.

    Reply this comment
  8. Proud Member of the Ignorance Caucus
    Proud Member of the Ignorance Caucus 8 April, 2013, 13:32

    I believe Krugman’s PR operation deliberately provides the news media with photos of Krugman looking thoughtful in front of the Princeton logo to maximize his aura of intellectualism.




    Reply this comment
  9. Dyspeptic
    Dyspeptic 8 April, 2013, 13:40

    “Keynesian economics is rooted in Marxist-Leninist ideology.”

    Not exactly. It’s actually far more dangerous than Communism because it claims to be saving Capitalism while actually destroying it from within. At least the Commies were honest about what they wanted to achieve. Keynesians are a bunch of Ivory Tower utopian technocratic elitists with delusions of grandeur and a ruthless desire to impose a state directed economy at all cost. Keynes himself admitted that his economic theories were more compatible with the political system of Nazi Germany than a free and open Western Democracy.

    Keynesianism has always been a greater threat to economic liberty and free markets than totalitarian Marxism because it leaves Democratic institutions intact, thereby fooling people into believing that nothing has fundamentally changed. It provides an intellectual justification for endless deficit spending, massive growth of government and inflationary money creation that destroys private capital. If you want to destroy an economic system first make it hopelessly debt ridden, raise taxes sky high and then destroy it’s life blood – The Money Supply.

    Reply this comment
  10. EJ
    EJ 8 April, 2013, 15:06

    Krugman is dangerous to this country.

    Reply this comment
  11. stolson
    stolson 8 April, 2013, 15:39

    If you want to destroy an economic system first make it hopelessly debt ridden, raise taxes sky high and then destroy it’s life blood – The Money Supply.
    WOW–Obama Man to a tee. I guess his puppets in Europe are pushing for full steam ahead! The international globalists have a plan for the USA!

    Reply this comment
  12. Donkey
    Donkey 8 April, 2013, 16:56

    Can anyone like Krugman name one business in California that is on thee rebound?

    The state has millions native unemployed, with more poor people moving in everyday, this guy is either a liar, a fool, or both!! 🙂

    Reply this comment
  13. BobA
    BobA 8 April, 2013, 19:00


    Technically you’re correct. Moreover,Keynesians are statists at heart and believe that individual rights and liberties are subservient to the state. Put another way Keynesians are collectivists who believe the rights of the collective trumps the rights of the individual.

    They are a clear and present danger to a constitutional republic that respects the rights, liberties and freedoms of the individual.

    Reply this comment
  14. Queeg
    Queeg 8 April, 2013, 20:31

    Too much work! Ulysses has me going seven days a week this Spring moving the last remnants of taxable targets in California. Think I got bout two more busy years before the switch to tearing down inner city delaoidated homes in SB, Stockton and Adelanto.

    Don’t you just love capitalism?

    Reply this comment
  15. Brown delta trout
    Brown delta trout 8 April, 2013, 21:00

    Queeg wants more people to join him in the concentration camp.

    Reply this comment
  16. jimmydeeoc
    jimmydeeoc 9 April, 2013, 08:43

    Queeg — pull those steel balls out of your pocket….it will calm your nerves.

    Reply this comment
  17. Ulysses Uhaul
    Ulysses Uhaul 9 April, 2013, 11:48

    Queeg is a touchy person….does not repond to positive reinforcement….he is a working fiend out in the rental yard, but he is reall leery of CWD types chiseling us on their moves to southern redneck tax havens.

    Reply this comment
  18. fish
    fish 9 April, 2013, 11:54

    Really Ulysses how do you guys fit all those personalities in just the one skull?

    Pack and Ship U…..pack and ship!

    Reply this comment
  19. Queeg
    Queeg 9 April, 2013, 19:52

    The Carp has no understanding about multiple personality diagnosis…….only Teddy understands all on CWD!

    Reply this comment
  20. david kerr
    david kerr 10 April, 2013, 06:38

    California will get a tax windfall from capital gains taxes paid on April 15. The media will claim tax receipts went up because of prop 30. Only later will the State controller start his monthly excuses for why tax receipts came in much less than anticipated, especially sales taxes and corporate taxes. The state controller’s report and the latest on the budget deficit come out close to the tenth of every month.

    Reply this comment
  21. Ray Darrah
    Ray Darrah 10 April, 2013, 07:17

    High income earners are leaving the State and moving to Vegas and other areas of the SouthWest……..

    The taxes forced people to leave. Between federal and state taxes, those earning over 250,000 are taxed at over 50% on all earnings over 250,000………..

    Without high earners spending money, what’s left but those taking from the government to spend on others taking from the government……

    Good luck with that.

    Reply this comment
  22. BobA
    BobA 10 April, 2013, 08:30

    Ray Darrah:

    Having paid the AMT tax for 10 years, I finally beat it by retiring in 2008. I now pay the lower dividend, interest income and capital gains tax. I’m a California native and they’re not forcing me out -yet.

    By the way: When Warren Buffett said he paid a lower tax than his secretary, what he did say was that his income is not derived from an payroll check. Thus he is not subject to payroll taxes.

    When you’re a billionaire, what do you need a paycheck for when just the earned interest on your money is in the millions of dollars per year?

    A mere one percent compounded interest rate on 1 billion is over 10 million dollars a year. Buffet is worth $46 billion.

    Reply this comment
  23. Brown delta trout
    Brown delta trout 10 April, 2013, 13:28

    BofA your right, retiring doctors and other investors are still planning on owning a home in California, but it will not be the principle residence for many. The heat is on the working middle class. Indebted, regulated and taxed servitude.

    Reply this comment

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