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Fiscal facts aren't all that matters. Investors' perceptions can also have an impact--if California is perceived to be in trouble, investors demand higher premiums on bonds, and the costs for California to borrow money increase. This can lead to a detrimental cycle of destruction, akin to what happened to Lehman Brothers.
there is also, more probable for a state, scenario of AIG/etc... - federal government stepping in.
So many seemingly educated Americans can't tell - or artfully avoid telling - the difference between state and federal taxation and spending. Also, here's the dirty secret: people in other states don't really "get back" any of that federal money unless they work at federal facilities, including military bases, common in the states accused of getting more federal money than they give. If they're really lucky, they might get that money at a remove or two if they work in lower-end service jobs near a military base.
But then, that whole thing is a strawman. Some random idiot might be saying Californians are all lazy good-fer-nuthin's, but everyone else isn't talking about Californians, but an unsustainable state government.
"California’s a basket case? The state has one of the highest living standards in the country..."
I'm rather horribly reminded of global warming "skeptics" who hoot every time it snows.
"Californians are so productive that every year they send billions of dollars in surplus dollars to the rest of America. Year after year they have sent vastly more in federal taxes than they ever get back in federal spending." So many seemingly educated Americans can't tell - or artfully avoid telling - the difference between state and federal taxation and spending. Also, here's the dirty secret: people in other stat…
People in these states don't drive on federally-funded roads, or have anything to do with anything else that receives federal dollars? Right-wingers are keen on talking about trickle-down when it comes to tax cuts, but mention nothing of the multiplier effect of the spending habits of the people who earn money which comes directly from the federal government. So yes, people in those states "get back" big from federal spending!
"Californians are so productive that every year they send billions of dollars in surplus dollars to the rest of America. Year after year they have sent vastly more in federal taxes than they ever get back in federal spending." So many seemingly educated Americans can't tell - or artfully avoid telling - the difference between state and federal taxation and spending. Also, here's the dirty secret: people in other stat…
"Also, here's the dirty secret: people in other states don't really "get back" any of that federal money unless they work at federal facilities,..." People in these states don't drive on federally-funded roads, or have anything to do with anything else that receives federal dollars? Right-wingers are keen on talking about trickle-down when it comes to tax cuts, but mention nothing of the multiplier effect of the spen…
They don't pay federal gas taxes, either? You might do better picking something better than federal road spending when trying to defend California, incidentally.
But that's the problem you face when you try to reduce distinctly different things like federal and state spending to "But California really has a surplus, honest!"
"Right-wingers are keen on talking about trickle-down"
So? They're also big on "starve the beast" deficit spending, but that hasn't worked in California, either.
ETA: Suggestion - disengage from your partisan reflexes. Think. Remember than the Republican Party in California has been as much of a contributor to the problem as the Democratic one, at least in proportion to how much power they have had, if that helps.
California's in trouble. It'll certainly survive and improve, but the spending cuts and tax hikes that they'll have to have this time (or if they sweat and bluff it through a few more years, the next time there's an economic downturn) will be far from fun.
"Californians are so productive that every year they send billions of dollars in surplus dollars to the rest of America. Year after year they have sent vastly more in federal taxes than they ever get back in federal spending." So many seemingly educated Americans can't tell - or artfully avoid telling - the difference between state and federal taxation and spending. Also, here's the dirty secret: people in other stat…
Oh, well.
IANAE (I am not an economist), but here's an observation from a born-and-bred Californian: whenever the economy is bad, the state budget takes it on the chin. California is big -- bigger than a lot of people realize. I mean this in terms of geography and population. So it seems to me that national problems are magnified here in our microcosm. Once the economy picks up, the state problems ease. Tangential anecdote : I…
Here's what strikes me as funny: California's budget crunch is $25 billion. Texas (a paragon of small government) is facing a deficit of... $25 billion. The fact that both states have similar deficits would seem to back your argument that this has more to do with the economy than budgetary policy. http://www.dallasnews.com/sharedcontent/dws/news/politics/st... http://articles.sfgate.com/2010-11-11/news/24826042_1_bud…
You must be thinking of a different Texas than I live in. :P
Even if the $25B deficit pans out in the end, and aside from the other differences between the states (including the counter-intuitive one that Texas has been less hard-hit during this downturn), you still end up with a situation where states face major budgetary crises at every downturn because revenue only balances spending near the height of economic booms.
That's a budgetary policy problem even when it's not unique to California. And for California, it's turning out rather badly.
Earlier quoted context omitted.
Here's what strikes me as funny: California's budget crunch is $25 billion. Texas (a paragon of small government) is facing a deficit of... $25 billion. The fact that both states have similar deficits would seem to back your argument that this has more to do with the economy than budgetary policy. http://www.dallasnews.com/sharedcontent/dws/news/politics/st... http://articles.sfgate.com/2010-11-11/news/24826042_1_bud…
The debt (read: accumulated past deficits) isn't the only, or even main, issue; rather it's the future liabilities that are killers. For example, California has unfunded pension liabilities of over $500 billion [1]. To put that number in perspective, it's almost seven times greater than all the outstanding voter-approved state general obligation bonds in California. [1] http://www.stanford.edu/group/siepr/cgi- bin/si…
That's the big change; entitlements (and pensions as a subset of those worth calling out specially). To do an article about how glorious the California future is and to criticize not just the arguments but the motivations of those saying there are problems, but for neither the word nor the concept of entitlements to show up is just constructing a straw man and cherry-picking the budget numbers.
For that matter reading the article straight you might be mystified about why California has very recently resorted to the very legally-dubious IOU-money-but-not-quite-money scheme. If it was even half as rosy as this guy is arguing that shouldn't have been even close to necessary, but in the real world, it was.
Interesting article. One statement struck me as odd: > Most of the states that have grown faster than California during that time are farm states, riding an incredible boom in agriculture prices. I suppose there is nothing wrong with this statement, strictly speaking. However, it suggests that CA is not a "farm state". But it certainly is. CA is the number-one agricultural producer of all the 50 states. It's a clear…
It should be noted that at least one "farm state" (ND) is becoming much more of an oil state in recent years. It looks like this will continue as they just discovered another reserve that is bigger than the current one.
If you have some free money, building rental housing in northwest ND is a very safe bet.
//edited because of odd autocorrect
"Californians are so productive that every year they send billions of dollars in surplus dollars to the rest of America. Year after year they have sent vastly more in federal taxes than they ever get back in federal spending." So many seemingly educated Americans can't tell - or artfully avoid telling - the difference between state and federal taxation and spending. Also, here's the dirty secret: people in other stat…
Dang, shouldn't have baited the "skeptics". Oh, well.