Why California's Broke

Discussion in 'Politics, Religion, Social Issues' started by Desertrat, Jul 13, 2009.

  1. Desertrat macrumors newbie

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    Terlingua, Texas
    #1
    There are some people who unendingly call for more government efforts of all sorts; more regulations and the agencies and personnel with which to enforce them. One wonders if, for those people, there is ever such a thing as "enough". From observation of the Great & Sovereign State of California, it looks like they've gone far beyond "enough". $26 billion too far.

    I was reading along quite happily in today's Doug Casey's "The Room" edition, and ran across an interesting tidbit about halfway down.

    "I can well remember the sense of incredulousness I felt back in 2005 when watching state governments, flush with tax loot as a result of booming real estate and investment markets, passing lavish new spending programs. The financial rationale for the many new programs at the time could best be described as “Happy Times Are Here Forever!”

    Well, now they are learning the hard way that they are not, leaving the government worker unions scrambling to retain their grips on the public purse. In California, where a pitched battle has been going on over the soaring deficits, the government unions are taking the stance that their backs are up against the wall. That they have pretty much cut all they can cut and still provide the services that the helpless public demands of them. A contention that someone with a brain and a lot of time on their hands answered by assembling the following list of California state agencies."

    Scroll down about halfway, read the list and shake your head:

    http://caseyresearch.com/drpRoom.php?e=true
     
  2. Ugg macrumors 68000

    Ugg

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    Penryn
    #2
    To be fair, the list is highly misleading. Unless I'm mistaken, with the exception of CSU Merced, all the universities he lists have been around for many decades. Some are also federally mandated like Medi Cal, California's Medicaid program. The Central Valley Flood Protection Board can hardly be something thought up by the latte sippers...

    However, a lot of them are essentially sinecures for old political workhorses. A lot of money is spent on salaries, per diems, glossy brochures outlining their lofty goals, weekend getaways, etc.

    They need to be eliminated but I'll bet you that as many were created by repubs as by dems.

    They're also not something new. The 1870s saw a lot of cronyism in state government and after WWII, it only got worse.

    I looked at the list and saw CalTrans, our highway department. Are you implying that the state needs to do with out road repair? Whoever writes that website is very, very sloppy.
     
  3. Desertrat thread starter macrumors newbie

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    #3
    Somehow I really, really doubt that anybody is suggesting shutting down universities or agencies such as CalTrans. What is evident, however, if you browse down through this incredible list, is that the state has gone heavily into micro-management of the citizenry. That takes lots of personnel who over the years have come to be a burden on the taxpayers due to the size of their benefits package. No different from the problems that GM has had.

    I know from eleven years of state government employment in Texas that it is common for state agencies to staff at levels which allow them to deal with the infrequent large-scale workloads. An aspect of such employment is that folks don't get laid off as workloads drop off; they're kept on in make-work activities. And, as the public responds to legislative offerings of new programs with continued votes, the situation merely gets worse. Two-fold problem: The public has learned that it can howl for Goodies From Government, and the politicians have learned that catering to the howls gets votes.

    Too many people feeding from the public coffers. But California is not alone; it's but one of many--up to and including the national level.
     
  4. jecapaga macrumors 601

    jecapaga

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    #4
    Imagine that. You, of all people worked in government. Hilarious.
     
  5. Eraserhead macrumors G4

    Eraserhead

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    UK
    #5
    The actual problem is that they can't raise taxes, or easily reduce spending due to propositions for both and partisanship for the former (as they can't approve a budget without a 2/3 majority).
     
  6. Desertrat thread starter macrumors newbie

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    #6
    jecapaga, in 1964/1965, jobs in Austin, TX, for mechanical engineers were not common, unless one wanted to be a subdivision engineer. Yuck. I found a job where they wanted a mechanical-background guy to train into civil engineering. The work was fun; quite enjoyable. The bureaucracy sucked. I wound up designing an equivalent to the California Water Project which takes water from Oroville to Los Angeles. Wound up in environmental stuff; got hired away to a consulting firm and four years of brain-picking on the bug'n'bunny PhDs from state and federal agencies. That led to "political engineering" and writing some legislation on hazardous waste disposal. Then I dropped out of organized working for other people.

    Eraserhead, California's restrictions on property taxes have been on the books for decades. They went to income taxes as the primary source of revenue. That meant that they should have had cash reserves built up against hard times--which is Basic Prudence 101. Not only did they not give any consideration to serious downturns in the economy, they went overly-generous on salaries and benefits. Sure, of the list, many are worthwhile agencies meeting true public needs. But 520 of them? Staff for 520?

    Now, it's proverbial chickens'n'roost time. They can't pay, they can't play--but they can whine and try to blame everybody but themselves.

    But it's gonna get worse...

    'Rat
     
  7. solvs macrumors 603

    solvs

    Joined:
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    Location:
    LaLaLand, CA
    #7
    How exactly did you become an expert on CA all the way from TX (and you've got your own problems there BTW, no)? I can tell you it's much more complicated than that living here, and growing up here most of my life. And if anyone wants to go blaming "liberalism" or even "socialism" like the other thread, what letter follows our Gov, (D) or (R)? Do the Dems, let alone the liberals, actually have the power to overturn that 2/3 majority and actually get anything done? I didn't think so.

    Surprised 'Mac isn't all over this, but I guess it's pointless to even bother.
     
  8. Desertrat thread starter macrumors newbie

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    #8
    solvs, it's easy enough to identify the nation's worst example of states in financial trouble. The LA Times is a fair start for info. You can also get all manner of commentary--with numbers--from those in the world of financial investment advice, since they're directly concerned with profit and loss as a function of the business climate of any location.

    For me, watching the goings-on began in the mid-1980s, with a sense that the whole country had gone on a Saturday night spree of excess spending. Individuals as well as government. I've watched the increase in numbers of governmental agencies since the LBJ era, as well.

    We got away with a lot of foolishness while the money was flowing, but folks seemed to believe that there would never be an end to good times. So, more and more government programs with the necessary staffing, more people dependent on tax dollars to sustain them. California has apparently been among the leaders in this, and now they're out of money. Why is anybody surprised?

    Other states and the feds are in the same boat, for the same reasons...

    I'll amend Mrs. Thatcher's comment: "The trouble with Statism is that it eventually runs out of the taxpayers' money."

    'Rat
     
  9. solvs macrumors 603

    solvs

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    #9
    I don't need to read about it, I've lived it.

    You're still ignoring the obvious about our stupid system that basically demand everything but doesn't want to pay for it. Or more, that it's being run and/or held ransom by people with (R)'s after their names and those with (D)'s who might as well. Not that they are the only ones to blame, plenty to go around, but since they've been holding the purse strings and making the rules (or again, blocking the counter measures) they are going to be more responsible. Just as Bush (both of them), Reagan, and Hoover were when they, at the very least, didn't help, and not even at most, made things significantly worse. No matter how many times you guys keep lobbing words like Stalinist, socialist, liberal, or whatever else you feel like blaming it on, despite all evidence to the contrary.
     
  10. Desertrat thread starter macrumors newbie

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    #10
    Y'all knew you had Prop 13. Y'all knew you had recalcitrant Republicans. So, just because good times provide a bunch of money, why would you then assume they'd be good forever, and go on and pass expensive legislation in spite of potential future logjams?

    Forget political labels. They're irrelevant to what was done: Irresponsible financial planning and decision-making for the expenditure of public monies.

    Your Lege has behaved like a bunch of teeny-bopper drunks with a credit card, with the idea that Daddy would write a check to Mr. Visa. And the idea that sprees don't result in hangovers.

    You can tell your Lege, "Welcome to reality."

    When you commit yourself to spending today, with money that comes in tormorrow, you better have a clue as to what tomorrow might be. This current debacle has been obviously coming on for more than just a year or so. Many, many financial types have been predicting it. Roubini and Schiff, among others. Roubini called it in 2002, IIRC, and Schiff in 2004. The Agora Group, and Doug Casey, at least by 2005. Even dumb little old me started loading up on gold back when it was below $400.

    solvs, you've been here a long time. We had general chatter about a coming recession, back in 2007. I know I cited Soros' comments about what he foresaw, and he made his comments in late 2006.
     
  11. solvs macrumors 603

    solvs

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    #11
    You lot were the ones blaming liberals, liberalism, and in another thread even socialism. That was one of my main problems with the criticism, especially coming from those in places who have their own problems, but feel the need to complain about mine without really understanding the finer points of the why's. I was the one who noted this was a bipartisan problem, just noting that the guy in charge has an (R) after his name, surrounded by a bunch of obstructionists who also lean right, Dem and GOP. Now you say you want to forget political labels. Of course.

    I know we've talked about the economic issues before the crashes, and I know you've agreed that things weren't sustainable and that we could be having hard times ahead. But I also remember you being one of those a few years ago saying the economy at the time was good, and us arguing about it when I said it wasn't. It wasn't, it's only gotten worse as the rest of the country is experiencing what was already happening. Not bragging, just pointing it out to the same people who continue to listen to those who were completely and totally wrong about this whole thing, while those of us who were listening to those who were right still are.

    We can all agree that the economy is bad right now, can we now also agree that it actually has been for quite some time, and more of the same won't fix it?


    Also, for the record, the new compromises to balance the deficit here are absolutely horrible. I want balance too, but some of the programs they are cutting are desperately needed, like healthcare for children and home care for the disabled. Meanwhile, while they continue to fuss with sales tax, talks about car taxes and property taxes, the still decline to properly raise taxes on industries who are going to stay here anyway doing what they do, like the oil companies (when even Alaska does), and the upper classes (god forbid they go back to paying the 3-5% more they used to pay, even under GOP rule) who some feel already pay too much. Someone has to pay for the mistakes of the past, pardon me if I feel children and the disabled (already reeling from past cuts, even when things were good) shouldn't continue to suffer while those who benefited from those great times the most, continue to not want to pay a little more to help the rest of us out.

    http://www.couragecampaign.org/page/s/CaliforniaClosed
     
  12. Desertrat thread starter macrumors newbie

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    #12
    Sure, a few years back the economy was good in terms of money in circulation. The point is that few gave thought to the notion that the good times wouldn't last forever. Most went to the malls and bought frou-frou and bling. I went to the coin dealer and bought gold.

    The dot-govs bought frou-frou and bling with funds based on hoped-for income of the future. Oops! It's the old variation on Parkinson's Law, but "Government spending expands to use all available funds." And I'll add, "...plus present and future."

    Politicians as a group are stupid. E.g., NYC once sold municipal bonds to pay current operating expenses because they couldn't meet payrolls and fund programs. Never be surprised at legislative foolishness.

    "...we now also agree that it actually has been for quite some time, and more of the same won't fix it?"

    Not only yes but hell, yes! I've been saying that since the stupid Bush/Congress "stimulus package" and TARP. The "change" guy isn't changing anything.

    As far as the legislative "solution", whatcha gonna do? When you're out of money, you don't have much in the way of a choice but to change from steak to macaroni. When the worker bees run low on honey, the drones start going hungry.

    Gonna get worse. Not only from reduced income taxes as this depression drags on, but there's gonna be a good bit of loss from the reduced agricultural productivity as a result of the court-decision loss of irrigation water in the Central Valley. Add in the foreclosures in both residential and commercial properties. The Lege probably oughta figure on knocking off another 20% or so for next year.

    Other states are in bad shape, if not as dramatically. Even those not yet hard-hit will have problems next year and quite possibly/probably the year after.

    Philosophically, the more that government grows, the more people are dependent on it for correct monetary decisions. People then suffer when government is wrong in reading the tea leaves. The smarter folks figure out how to make a living without involvement from government. They're less vulnerable to stupidity.

    The neat thing for electees is that they can screw up without penalty. The worst that can happen is to lose in the next election, but all that means is that they gotta go back to work for a living. No jail, no swinging from lampposts, no tar and feathers. As Californian Thomas Sowell said, "It is hard to imagine a more stupid or more dangerous way of making a decision than by putting those decisions in the hands of people who pay no price for being wrong."

    'Rat
     

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