Another comment from a friend in California. Perhaps other from California can comment on this one. Not really focused on healthcare but on the budgetary problems facing California and other states and countries:
I don’t know if I forwarded this one to Dom but here is something to consider – McClintock, is in my opinion, one of the better ones but even he has had his “incidents”. State Assy, State Senate and now a first term Congressman....In this speech, he is spot on as to what happened here.
BTW – I am a native Californian, have lived all but 18 months out of 57 years in and around NorCal but most of the time here in the Big Tomato. I have followed California politics, passionately, for 45 years.
California as a warning for America
July 13th, 2009, 4:59 pm
Congressman Tom McClintock offered remarks in
Washington, D.C., on Friday to the Competitive
Enterprise Institute and Pacific Research
Institute that clearly illustrate why California
is facing such a large fiscal mess. His beginning
joke is so funny because it is so true:
"I know that everybody likes to poke fun at
California - but I can tell you right now that
despite all of its problems, California remains
one of the best places in the world to build a
successful small business. All you have to do is
start with a successful large business."
Here is the rest of the speech:
Laugh if you will, but let me remind you that
when these policies finish wrecking California,
there are still 49 other states we can all move to - and yours is
one of them.
I should also warn you of the strange sense of
déjà-vu that I have every day on the House floor
as I watch the same folly and blunders that
wrecked California now being passed with reckless abandon in this
Congress.
We passed a "Cash-for-Clunkers" bill the other
day - we did that years ago in California.
Doubling the entire debt every five years? Been there.
Increasing spending at unsustainable rates? Done that.
Save-the-Planet-Carbon-Dioxide restrictions? Got the T-Shirt.
To understand how these policies can utterly
destroy an economy and bankrupt a government, you
have to remember the Golden State in its Golden Age.
A generation ago, California spent about half
what it does today AFTER adjusting for both inflation and
population growth.
And yet, we had the finest highway system in the
world and the finest public school system in the
country. California offered a FREE university
education to every Californian who wanted
one. We produced water and electricity so
cheaply that many communities didn't bother to
measure the stuff. Our unemployment rate
consistently ran well below the national rate and
its diversified economy was nearly recession-proof.
One thing - and one thing only - has changed in
those years: public policy. The political Left
gradually gained dominance over California's
government and has imposed a disastrous agenda of
radical and retrograde policies that have
destroyed the quality of life
that Californians once took for
granted.
The Census Bureau reports that in the last two
years 2/3 of a million more people have moved out
of California than have moved into it. Many are
leaving for the garden spots of Nevada, Arizona and Texas.
Think about that. California is blessed with the
most equitable climate in the entire Western
Hemisphere; it has the most bountiful resources
anywhere in the continental United States; it is
poised on the Pacific Rim in a position to
dominate world trade for the next century, and
yet people are finding a better place to live and
work and raise their families in the middle of
the Nevada and Arizona and Texas deserts.
I submit to you that no conceivable act of God
could wreak such devastation as to turn
California into a less desirable place to live
than the middle of the Nevada Nuclear Test
Range. Only Acts of Government can do that. And they have.
You can trace the collapse of California's
economy to several critical events: the rise of
environmental Ludditism beginning in 1974; the
abandonment of constitutional checks and balances
that once constrained spending and borrowing; and
the rise of rule by public employee unions.
There are other factors as well: litigation,
taxation, illegal immigration - but for the sake
of time let me concentrate on the big three.
The first was the rise of environmental Ludditism
with the election of a radical new-age leftist
named Jerry Brown as governor of the state - an
election that also produced overwhelming liberal
majorities in both legislative houses.
Like Obama today, Brown lost little time in
pursuing his vision of California - an incoherent
combination of pastoral simplicity, European
socialism and centralized planning. At the
center of this world view was a backward ideology
that he called his "era of limits" - the naive
notion that public works were growth inducing and
polluting and that stopping the expansion of
infrastructure somehow excused government from
meeting the needs of an expanding population.
Conservation replaced abundance as the chief aim
of California's public works, and public policy
was redirected to developing irresistible
incentives for the population to concentrate in
dense urban cores rather than to settle in suburban communities.
Brown infused his vision into every aspect of
public policy, and it is a testament to his
thoroughness and tenacity that its basic tenets
have dominated the direction of California
through both Republican and Democratic admi
nistrations.
He canceled the state's highway construction
program, abandoning many routes in
mid-construction. He canceled long-planned
water projects, conveyance facilities and
dams. He established the California Energy
Commission that blocked approval of any
significant new generating capacity. He enacted
volumes of environmental regulations that created
severe impediments to home and commercial
construction, empowering an incipient no-growth
movement that began on the most extreme fringe of
the environmental cause and quickly spread.
This movement reached its zenith with Arnold
Schwarzenegger and the enactment of AB 32 and
companion legislation in 2006. This measure
gives virtually unchecked authority to the
California Air Resources Board to force Draconian
reductions in carbon dioxide emissions by 2020.
This has dire implications to entire segments of
California's economy: agriculture, baking,
distilling, cargo and passenger transportation,
cement production, manufacturing, construction
and energy production, to name a few.
We, too, were promised an explosion of "green
jobs," but exactly the opposite has happened.
Up until that bill took effect, California's
unemployment numbers tracked very closely with
the national unemployment r
ate. But since then,
California's unemployment rate began a steady
upward divergence from the national jobless
figures. Today, California's unemployment rate
is more than two points above the national rate,
and at its highest point since 1941.
The second problem is structural: the collapse of
the checks and balances and other constitutional
and traditional constraints on government spending and borrowing.
Let me mention a few of them.
The State Supreme Court decision in Serrano v.
Priest severed the use of local revenue for local
schools and invited the state take-over of public
education. AB 8 of 1979 - the legislature's
response to Proposition 13 - essentially did the
same thing to local governments generally.
This means that vast bureaucracies have grown up
over the service delivery level, wasting more and
more resources while hamstringing teachers in
their classrooms, wardens in their prisons and city councils in
their towns.
Next, constitutional constraints on fiscal
excesses began to fall. In 1983, Gov. George
Deukmejian approved legislation to remove the
governor's ability to make mid-year budget
corrections without having to return to the
legislature. The loss of this provision A
0exposed
the state to chronic deficit spending by removing
any ability of the governor to rapidly respond to
changing economic conditions.
In 1989, Deukmejian sponsored Proposition 111
that destroyed the Gann Spending Limit that had
held increases in state spending to inflation and
population growth. If that limit had remained
intact, California would be enjoying a budget surplus today.
The disastrous tax increases by Pete Wilson in
1991 and Arnold Schwarzenegger this year were
made possible by this tragic blunder.
Finally, we've watched the constitutional budget
process that had produced relatively punctual and
relatively balanced budgets for nearly 150 years
collapse in favor of an extra-constitutional abomination called
the big five.
That new process, that began under Pete Wilson
and has culminated under Arnold
Schwarzenegger bypasses the entire legislative
deliberative process in favor of an annual deal
struck between the governor and legislative
leaders behind closed doors and handed to the legislature as a
fait accompli.
This short-circuits the separation of powers that
is designed to discipline fiscal excess and it literally bargains
away the line-item veto authority of the governor. It is
a process that
allows legislative leaders to extract concessions
from the executive that would not be possible if
the separation of powers were maintained.
With the checks against excessive spending broken
down, borrowing became the preferred method of
public finance. The Constitutional requirement
that all taxpayer-supported debt be approved by
voters began to erode in the 1930's, when a
depression-era Supreme Court decision allowed the
state to run a temporary deficit in the event of
an economic down-turn - as long as the shortfall
was addressed in the following fiscal year. This
practice was narrowly construed until the Wilson
administration began using it to justify
spreading out a single year's budget deficit over several years.
During the 1980's, Gov. Deukmejian began
employing a legal fiction called a "lease revenue
bond," to circumvent constitutionally required voter approval.
Although Proposition 13 still protects property
owners from unsustainable increases in their
property taxes, most of the other fiscal
constraints are now gone, and California has
entered a period of unprecedented public debt to
finance an unprecedented expansion of state government.
The third factor that also can be traced back to
the 1970's was the radical transform
ation that
took place in the nature and power of the state's
public employee unions. Until that time, state
law prohibited public employee strikes against
the public and prohibited collective bargaining or closed shops.
During the Jerry Brown era, a series of
collective bargaining acts handed to public
sector unions all the rights and powers of
private sector unions - but without any of the
natural constraints on private sector
unions. The unions soon brought these newly-won
powers to bear to elect hand-picked officials to state and local
office.
Today, political expenditures by public employee
unions exceed all other special interest groups,
while they hold compliant majorities in the state
legislature and most local agencies.
The result has been radically escalating
personnel costs and radically deteriorating performance.
The impact on governmental services has been
devastating. Despite exploding budgets, service
delivery is collapsing. Firing incompetent
teachers has become a virtual impossibility,
adding to the deterioration of educational
quality. Essential services can no longer be
performed because labor costs have made it
impossible to sustain those services.
Today, California is like the
shopkeeper who
leased out too much space, ordered too much
inventory, hired too many people and paid them
too much. Every month the shopkeeper covers his
shortfalls with borrowing and bookkeeping
tricks. Ultimately, he will reach a tipping
point where anything he does makes his situation
worse. Borrowing costs are eating him alive and
he's running out of credit. Raising prices
causes his sales to decline. And there's only so
much discretionary spending he can cut.
That's the state's predicament in a
nutshell. California's borrowing costs now
exceed the budget of the entire University of
California and it is increasingly likely that it
will fail to find lenders when it must borrow
billions to pay its bills at the end of this month.
Ignoring dire warnings, Gov. Schwarzenegger and
legislators from both parties earlier this year
imposed the biggest state tax increase in American history.
And I can assure you that the Laffer curve is
alive and well. In the first two months after
the tax increase took effect, state revenues have plunged 33
percent.