Posted on 12/27/2009 8:57:57 AM PST by Starman417
It is becoming increasingly clear that the structural deficit in California cannot be solved by any means available to the legislature, by economic growth, or by just plain luck. It is time to think the unthinkable: that the only way for California to get its financial house in order is through bankruptcy.
A few decades ago, California was a Republican state. It was growing like crazy, had great roads, top public schools, top universities, and a vibrant growing economy. Drawn by the nice weather, a business friendly environment and all sorts of creative capital formation, entrepreneurs in technology, biology, engineering, health, and you name it flocked to the state. The universities turned out well educated graduates that stayed in the state and fed the almost insatiable hunger of the business community for intelligent, trainable employees. People young and old flocked to California which they rightfully perceived as a land of opportunity.
Things started to change in the seventies. Opposition to the Vietnam war had been strong in California and as the war wound down, that opposition, already organized around radical principles, began to assert itself as voters, electing ever more liberal local and statewide politicians. Gradually, the state became majority democratic and the legislature and many of the municipal entities became Democrat controlled. A left wing anti-business tax and spend regime gradually took hold and became firmly rooted.
The peculiar way in which the legislature organizes itself gave the Speaker of the Assembly almost dictatorial power and hidden away in Sacramento, there is essentially no fourth estate scrutiny over legislative activities. A succession of Speakers starting with Phillip Burton, then Willie Brown etc. came from San Francisco and the Bay Area, long a liberal bastion, and they were able to control the ebb and flow of legislation such that left wing constituencies were rewarded, municipal unions were strengthened and the teachers’ unions gained complete control over public education. Regulation after regulation was imposed on business and a vast array of social welfare and related programs were enacted. It is estimated that regulations in the state currently cost nearly $500 billion per year. As long as the revenue was there, the legislature could find ways to spend it. Gradually, funding was shifting away from infrastructure maintenance and away from education and toward a miasma of social programs. Deferred infrastructure maintenance grew and grew. State government insinuated itself into nearly all aspects of life. Businesses large and small began to move from the state to escape these burdens.
(Excerpt) Read more at floppingaces.net ...
The migrants believe that Kalifornia is their rightful land anyway, I suggest we return it, BUT, because WE built the infrastructure (that attracts them there in the first place), we should return it to the condition it was in when they had it last.
What more unthinkable is that there are a dozen states just like this including NY, NJ, Fl, Ok
Give 'em Nevada and they'll be sneaking across the border into Arizona.
Bad ideas destroy. Period.
The march of gangs, liberalism and "wealth distribution" doesn't work... NEVER WILL.
Give 'em Nevada and they'll be sneaking across the border into Arizona.
Bad ideas destroy. Period.
The march of gangs, liberalism and "wealth distribution" doesn't work... NEVER WILL.
Yes, on the one hand it’s public policy to instill the notion that reality is subjective, words don’t really mean anything, there is no right and wrong, it’s all relative — except of course when it comes to tenure and pensions.
Now there of course, it’s strict adherence to the law, binding contracts, rule of law, yadda yadda. Hm.
but liberals think they are superior because they have empathy, and feeeeeelings, and are nurturing. And that is all thay matters. So why should they care if the cause bankruptcy
No, they don’t print more money. That’s bad enough, but it’s much, much worse.
They have to borrow it.
And pay interest on it. The dumbing down of America is almost finished, with all the stupid moves that are predictable as the sun rising in the east, culminating with a national Credit Card that is flashing DECLINED.
“The net is that pension obligations are binding contracts and can not be ended because the provider is unhappy with the terms. This includes public pensions.”
Actually many companies have shed their pensions in bankruptcy court, leaving the taxpayers holding the bag via the PBGC. Among the corporate plans the taxpayer assumed are: Bethleham Steel, Colins & Aikman, Cone Mills, Allis Chalmers, Anchor Glass, Delta Airlines pilots, Kaiser Aluminum, Kaiser Steel, Polaroid, United Airlines, US Airways, Westpoint Stevens. Many of these companies restructured in bankruptcy court and emerged without the obligation of funding their legacy pension plans.
Many other companies have ended their defined benefit pension plans replacing them with 401K’s or no plans. The companies do not guarantee the benefits of these new plans.
“
Thinking the Unthinkable, A California Bankruptcy
“
Unthinkable?
More like “The Inevitable”.
For a flyover-country guy like myself that lived in West LA during
1995 to 2005.
I remember showing my cousin from the Dallas-Ft. Worth area the construction
going on at UCLA in fall 2004. He was STUNNED to see the amount
of ongoing construction work (e.g., the center for Nanotechnology
in South Campus).
My cousin said “I thought California was broke. How can this be?”
I said “When has economic reality restrained modern California?”
“
A few decades ago, California was a Republican state. It was growing
like crazy, had great roads, top public schools, top universities,
and a vibrant growing economy.
“
That was then.
This is now.
Why is it unthinkable? California has been in the red for years and now their only option is to cut government spending to the point where only cops and fire depts are fully funded and everything else needs elimanated or take a 75% cut. You can’t keep on spending money you don’t have. I am not going to be in favor of bailing them out. You made the bed now lay in your mess!
Why not?
“Cut the salaries of all public employees by 25%, and eliminate their pensions.”
That would put a nice dent in the California deficit, but not much more than that. My back-of-the-envelope calculations indicate that the California budget deficit is so large that you'd have to fire just about everyone on the state payroll to nearly wipe out their deficit. The entire California state employee payroll is less than their state deficit.
Thus, even firing the whole bunch of them, I think you'd still have to cut a few other programs.
Now of course, it's ridiculous to assert (no matter how good it feels to do so) that the state could fire its entire workforce. But even if you cut the workforce by half and cut everyone else's pay by 25%, you'd still have a very large deficit.
And one wonders how much of both staffing levels and compensation levels are set in binding contracts.
That's why the author suggests a resort to bankruptcy court, as contracts mandating staffing and compensation levels could be voided. But the folks who left comments at the site point out that formal bankruptcy isn't an option for states. I don't know if that's true or not, but if that is true, it removes another possible way out of their crisis.
The article also discusses the fact that roughly 50% of the state budget has been written into law through the state intiative process. I don't know whether much of that could be altered even in bankruptcy court.
California may be the US’s first “failed state” along the lines that we call places like Somalia “failed states.”
sitetest
Did you hear that L.A. DWP got raises?
California could and should completely solve its fiscal problems by allowing off shore drilling of their own HUGE reserves of oil and natural gas......we keep hearing the administration calling for an end to reliance on foreign oil......California could lead the way......silly windmills aren’t going to do the trick.......pathetic
Because they are owned by the Kalifornia public employee unions.
If they actually secured the border, developed all of California’s energy reserves, and then once again made agriculture a water priority California would come back in no time.
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Agreed, with the addition that programs like the 8 billion for embryonic stem cell research and more billions for “Green” technology be abandoned. A political reversal is not likely. All the kids I went to school with in the 60s went through the hippie stage, then went to University and got indoctrinated that being a leftist was being “intellectual”, and are now “progressives” (Marxists). Everything is falling down around them and they still blame it on the last generation, the old system, capitalism. They won’t stop until capitalism is a thing of the past. The strategy is to burden capitalism with social entitlements until it collapses and dies. So as far as they are concerned, everything is going according to plan.
The only way to change things is to defeat these people and replace them with conservatives. Meg and Carly are not going to do the trick. Meg is campaigning that we need to try something different. Different doesn’t cut it. Carly is Demo-lite. Here is a platform that could win and would work.—
No state taxes for five years for anyone who employs at least one person (domestics not included)- Caps on future taxes-
Closing CA Air Resources Board and repealing CA Clean Air Act- Repeal of all laws based on theories of global warming and carbon dioxide pollution.
Stopping all programs of social and political engineering-
Stopping support of all scientific research until there is cash available to pay for it.
Reduction in state staff of 50% not including CHP, Prisons,and Cal Fire. Administrative cuts in excess of 50% with salary budget cut of 65%.
Limit on legislative sessions to 90 days each year. Each day over 90, decreases legislature’s pay by 2%.
Eliminate 75% of all boards, commissions, and bureaus.
Either a strong leader or a bankruptcy judge will have to do this. With the former, at least CA state bonds won’t go to zero.
The left will never admit that their communist society doesn't work, they will simply try to tax their way out of it and continue to do the things that have brought this state, and the country, to its knees. Ahhhnold should be thrown out along with 99% of the legislature.
When there are more people riding in the wagon than there are people pulling it, collapse is inevitable.
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