Barack Obama learned the rough sport of politics in Chicago, but his domestic policies have been shaped by California’s progressive creed. As the Golden State crumbles, its troubles point to those America may confront in a second Obama term.
From his first days in office, the president has held up California as a model state. In 2009, he praised its green-tinged energy policies as a blueprint for the nation. He staffed his administration with Californians like Energy Secretary Steve Chu—an open advocate of high energy prices who’s lavished government funding on “green” dodos like solar-panel maker Solyndra, and luxury electric carmaker Fisker—and Commerce Secretary John Bryson, who thrived as CEO of a regulated utility which raised energy costs for millions of consumers, sometimes to finance “green” ideals.
Obama regularly asserts that green jobs will play a crucial role in the future of the American economy, but California, a trend-setter in the field, has yet to reap such benefits. Green jobs, broadly defined, make up only about 2 percent of jobs in the state—about the same proportion as in Texas....When Governor Jerry Brown predicted a half-million green jobs by the end of the decade, even The New York Times deemed it “a pipe dream.”
Obama’s push to nationalize many of California’s economy-stifling green policies has been slowed down, first by the Republican resurgence in 2010 and then by his reelection considerations. But California’s politicians, living in what’s become essentially a one-party state, have doubled down on green orthodoxy. As the president at least tries to cover his flank by claiming to support an “all-in” energy policy, California has simply refused to exploit much of its massive oil and gas resources.
Does this matter? Well, Texas has created 200,000 oil and gas jobs over the past decade; California has barely added 20,000. The state’s remaining energy producers have been slowing down as the regulatory environment becomes ever more hostile even as producers elsewhere, including in rustbelt states like Ohio and Pennsylvania, ramp up. The oil and gas jobs the Golden State political class shuns pay around $100,000 a year on average. Instead, California has forged ahead with ever-more extreme renewable energy mandates that have resulted in energy costs roughly 50 percent above the national average and expected to rise substantially from there. This tends to drive out manufacturing and other largely blue-collar energy users.
Over the past decade the Golden State has grown its middle-skilled jobs (those that require two years or more of post-secondary education) by a mere 2 percent compared to a 5.3 percent increase nationwide, and almost 15 percent in Texas. Even in the science-technology-engineering and mathematics field, where California has long been a national leader, the state has lost its edge, growing just 1.7 percent over the past 10 years compared to 5.4 percent nationally and 14 percent in Texas.
This post was modified from its original form on 27 Apr, 20:11
With budget deficit blossoming by 5 billion to over 12 billion in 100 billion expenditures even after Gov Browns juggling and temporary measures.
Look for much more California as Greece in coming weeks!!!
This is why Orange and San Diego counties are looking to secede from the State of California and creat the 51st state.
They are? But you're LA county just like me, are we going down with the ship??
Interesting figures, you can change it to your state.
The weekend produced a spate of dang-this-is-bad articles on the economic situation in California. Steven Greenhut’s for the Orange County Register is entitled “California to middle class: drop dead.” At The Daily Beast, Joel Kotkin laments that “As California Collapses, Obama Follows its Lead.” (H/t – and a “Read it, people!” shout-out – to Ed Driscoll at PJM.)
But what does all this look like in terms of numbers? What’s the how much and where and whom of the Golden State collapse? Perhaps the most interesting and telling thing is that it really is as bad as it looks. And the reasons are pretty much what you’d expect. Here’s the California story, in numbers.
According to a March 2012 report, 855,000 is how many private-sector jobs California has lost since the recession started four years ago. (H/t: California Political News & Views.) The state today enjoys an unemployment rate of 11%, compared with the official national average of 8.3%
Texas, by contrast, has added 139,800 jobs, posting the biggest absolute gain among the 50 states. (California’s is the biggest absolute loss.) Texas’ unemployment rate is 7.1%. Number 3 on the job-growth list? The District of Columbia, with 21,000 added private-sector jobs. Government is big business.
But we were talking about California. How does California rank in terms of the average state and local tax burden? According to the Tax Foundation, in 2009, California had the 6th heaviest tax burden in the nation, at 10.6%. (New Jersey was #1, followed by New York at #2.) That’s the in-state tax burden, of course. Federal taxes are on top of that.
Of course, business climate comprises more than the average individual tax burden. The Tax Foundation looks at five forms of taxation – corporate tax, individual income tax, sales tax, property tax, and unemployment insurance tax – to index the business climates of the 50 states. By this combined measure, the Tax Foundation ranks California 48th in business climate. (New York is 49th, and New Jersey 50th.)
State regulatory environment? George Mason University’s Mercatus Center ranks the Golden State 48th in the nation. New Jersey and New York are numbers 49 and 50, respectively.
How about other business costs? California had the 5th highest state premium ranking for worker compensation insurance costs in 2010 (although the state’s position improved slightly in 2011 due to other states raising their state premiums).
California ranks 7th highest in electric utility costs, with Hawaii being the highest, followed by Connecticut and Alaska.
According to the Small Business & Entrepreneurship Council, California has the third-highest per-gallon gasoline tax (Connecticut and New York are #1 and #2) and by far the highest tax on diesel, at 52.5 cents per gallon. (Some numbers below also come from the SB&EC report.)
California perennially has the second-highest gasoline prices at the pump (Hawaii is #1), although the state has regularly been ranked 3rd or 4th in oil production in recent years. (In the past week the statewide average was $4.15 for a gallon of regular, down from $4.36 a month ago.) In spite of having the third largest oil and gas reserves of any state in the nation, California is ranked dead last among all US jurisdictions for global oil investment. The fact that California hasn’t issued a new offshore drilling permit for over 30 years is undoubtedly a factor, as is the fact that the Monterey Shale Oil Field, which holds 64% of all the recoverable shale oil in the United States, is hamstrung by lawsuits, a typical condition in the state for both drilling and refining operations.
In spite of the state’s natural bounty, California produces only 37% of its statewide oil consumption. The rest comes from other states and countries, at added expense.
In terms of the employer burden of health-insurance mandates, California is 9th among the 50 states and the District of Columbia. (Rhode Island, Maryland, and Minnesota have the highest burdens.)
Meanwhile, California ranks 4th highest in state and local government spending per capita. The District of Columbia is the highest, followed by Alaska, Wyoming, and New York.
Ah, yes, state spending. California has by far the largest debt of any US state, at around $612 billion with state and local debt and pension liabilities included. In terms of raw numbers, New York posts a pathetic second place with only $305 billion. The size of California’s population allows the Golden State to slip to only 7th place in terms of per capita state and local debt. The District of Columbia walks off with another prize in this category, having on the books 85% more debt per capita than the 50-state average.
The California debt spiral is due in part to the steep decline in state tax revenues. The 22% year-on-year decline observed in February 2012 doesn’t tell the whole story either; California had already posted dramatic revenue losses in business and property taxes between 2007 and 2010. Business-tax revenues dropped 18% in that period, and property-tax revenues fell 30% due to the real estate market crash.
Let’s talk population trends. Many readers are familiar with the arresting Golden State statistics cited by a Wall Street Journal article in March:
From the mid-1980s to 2005, California’s population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000.
The net gain in tax filers includes the author: I was added as a tax-paying filer to the California income tax rolls in 2004. Apparently there are another 149,999 of us, and I’m thinking we need a T-shirt. (And yes, alert readers, I understand that this was a net gain, reflecting both additions to and subtractions from the tax rolls over time. Just having some fun with these sad little numbers.)
California also has the distinction of having 12% of the US population and 33% of the nation’s welfare recipients. Governor Jerry’s Brown’s 2012-13 budget proposal includes $100 billion for health and human services, which, on an annualized basis, is more than all the state and local spending in 27 of the 50 states.
In California, meanwhile, the tax code is steeply progressive. Prior to the recession, the state got 45% of its income tax revenues from the top 1% of filers. As the Wall Street Journal pointed out last year, the incomes of filers in that top 1% — which in California starts at $490,000 – are more volatile than the incomes of other filers. California, New York, Connecticut, and Illinois are some of the states most dependent for revenue on the top 1%, and they have opened up the biggest state deficits during the recession.
How many businesses are leaving California? In 2011, 254 businesses left California, or an average of 5 per week. 202 left in 2010, 51 in 2009. Even “green” businesses are leaving California. The business environment is that overregulated, and costs are that high. A business saves, on average, between 20% and 40% on costs by moving out of California. (Even the lower figure is astounding for a move within the same nation.)
But according to a 2011 report, 2500 employers ceased operations in California between 2007 and 2011. The great majority of them simply went out of business. (I can certainly vouch for the observability of that trend in my area of Southern California. Besides small businesses closing – I can’t seem to keep a dry cleaner for longer than 6 months – we’ve had a number of big chain businesses pull out, leaving gigantic empty stores and parking lots. The last time I stocked up on household supplies at the local Wal-Mart, there were no greeters at the doors. An ominous portent.) How did California’s real GDP growth rank in 2011? 34th in the United States.
Cali as a scenic/recreational area; awesome!
Cali as anything else; sucksass...
But one of Governor Brown's solutions to the budget deficit problem is - ta dah! - more taxes! And he calls them "temporary." Seriously, has anyone ever heard of a "temporary" tax?
And people voted for this guy.....
"temporary" tax =
This post was modified from its original form on 01 May, 17:48
Ok, now its $16 billion
SACRAMENTO, Calif. — California’s budget deficit has swelled to a projected $16 billion — much larger than had been predicted just months ago — and will force severe cuts to schools and public safety if voters fail to approve tax increases in November, Gov. Jerry Brown said Saturday.
The Democratic governor said the shortfall grew from $9.2 billion in January in part because tax collections have not come in as high as expected and the economy isn’t growing as fast as hoped for. The deficit has also risen because lawsuits and federal requirements have blocked billions of dollars in state cuts.
No, I'm not LA county. I put Manhattan Beach up in the profile as my residence, which was a disguise. By now we all know I live in OC.
More and more the east coast looks inviting.
Tahiti, the east coast, at least my part, is not so great. The grass may seem greener, trust me it's yellowed and dying.
They are digging a serious hole...
"Liberal" Nancy is almost agreeing with this title thread. I guess my conservative Dad raised me right after all.
Not to worry - we're not moving any time soon! I was raised in the NE so am pretty familiar with most of the eastern seaboard. I can't seem to get past the idea of living in humidity again. I'm spoiled!
Tahiti, There are certainly alot of bad hair days. Not good
I do think though after reading through the above that Jersey may truly be greener than California. Not much, but a bit. Good luck!
Definitely don't want snow! Nor a lot of rain. Nor do I want to live in a place where English is not the primary language.
The tax collections that Governor Moonbeam - excuse me Governor Brown - had estimated in his state budget were nothing but fantasy, according to what I read. That is, fantasy to most except Governor Brown....
I am not sure of all details or truths to it, but on the news today, I heard our tax revenues were short by a decent amount as well. Alot of hard working people, alot of small business owners, just aren't making what they used to and now there is not as much to take from us anymore. They forgot to figure in the forgotten group. Maybe now they'll remember us.
Nice to see you Ms. Deb.
2 weeks ago -- Look for much more California as Greece in coming weeks!!!
Stock, commodity, and currency markets have been on a roller-coaster ride in recent days as Greece's election results leave that nation without a functioning government, and without a clear path toward staying in the euro currency.
The right answer, albeit a very painful one, may be for Greece to take their medicine and leave the euro, and for Europe to stop bailing out a dysfunctional country that can never be competitive without a less expensive currency. Wednesday marked an all-time low in the Greek stock market.
More important, however, and where few Americans seem to be looking, is our very own Greece: California. Since California doesn't have the option of seceding from the union, one wonders when the state will ask the IMF for a Greek-style bailout.
California's economy, with a Gross State Product of about $1.9 trillion, is more than six times the size of Greece's. At $90 billion, the state's budget (excluding the few hundred billion dollars of federal money distributed there) is only sixty percent of the size of Greece's national budget. But, California's budget deficit, estimated at $16 billion for the current fiscal year unless substantial changes are made, represents a stunning 17.5 percent shortfall and a huge miss from January predictions of a $9.2 billion deficit. Greece is now anticipating a deficit under 7 percent of GDP, but even allowing for typical politician optimism, the Greek deficit problem is arguably small compared to California's.
The good news in this debacle is that the state’s fiscal woes will make it nearly impossible to complete Governor Jerry Brown’s runaway high-speed rail train. The bad news is that the Governor is going to try anyway.
Transportation experts warn that the 500-mile bullet train from San Francisco to Los Angeles could cost more than $100 billion, though the Governor pegs the price at a mere $68 billion. The state has $12.3 billion in pocket, $9 billion from the state and $3.3 billion from the feds, but Mr. Brown hasn’t a clue where he’ll get the rest. …In 2008 voters approved $9 billion in bonds for construction under the pretense that the train would cost only $33 billion and be financed primarily by the federal government and private enterprise. Investors, however, won’t put up any money because the rail authority’s business plans are too risky. Rail companies have refused to operate the train without a revenue guarantee, which the ballot initiative prohibits. Even contractors are declining to bid on the project because they’re worried they won’t get paid. Mr. Brown is hoping that Washington will pony up more than $50 billion, but the feds have committed only $3.3 billion so far—and Republicans intend to claw it back if they take the Senate and White House this fall. If that happens, the state won’t have enough money to complete its first 130-mile segment in the lightly populated Central Valley, which in any event wouldn’t be operable since the state can’t afford to electrify the tracks.
What I want to know is just how many people want to take a train from LA to San Francisco, even if it will only take about 3 hours. Enough to make a profit? Sure, traveling at 200 mph would be a thrill for a kid, but you can bet those tickets will be more costly in the beginning than a trip to Disneyland.
Lets says $200 roundtrip into $100 billion - that's only 500 million customers they need, well forgetting about actually operating costs....$500 only 200 million customers, but who would pay 3 times as much as air fare?
Hey, I'd take the train. Much rather do that than drive of lfy.
But given the cost, it is kinda dumb.
If the train could be built, maintained and operated in a manageable, cost-effective way for both the user and operator. I would take the train. I don't like heights much, would love to see the country/city side of the state. I need visuals, I bore easy
However, we know this is never the case. Unfortunate...
Birght shiny objects!