Budget / Energy & Environment / Labor

Commentary: California Remains on Course for Economic Disaster

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One of the more interesting developments from Tuesday’s election is that California appears to be continuing on its way to economic meltdown. In addition to electing Jerry Brown and reelecting Barbara Boxer, both of whom have participated in California’s steady descent into failed-state status, California voters rejected key proposals necessary for staving off a statewide default.

One of the key initiatives defeated on Tuesday was Proposition 23, which would have suspended the state’s Global Warming Act of 2006 (AB 32) until the unemployment rate dropped to below 5.5% for four consecutive quarters. California’s unemployment rate, currently 12%, is one of the nation’s highest, and yet its voters appear to see no correlation between policies which drive up energy prices for individuals and small businesses and the dizzying numbers of the unemployed.

California continually looks to green energy jobs as a panacea, but analysis demonstrates that for every “green” job gained, two blue collar jobs are lost. The Heritage Foundation dispels the myths associated with AB 32, and other putative climate-change legislation, explaining that while “green” industries benefit greatly, the rest of the state is suffering tremendously from high energy prices and the rapid shedding of jobs.

Aside from California’s obstinate adherence to green legislation, the other deal breaker for the state is, of course, the rampant proliferation of unions and bureaucracy. It does not take an economist to explain how union and bureaucrat-backed pension plans are killing California. While public sector unions have threatened economic progress across the country, only in California have they succeeded in transforming an American state into a defacto European economy. Of course, this hideous mutation would have been impossible without the support of California elected officials such as Jerry Brown and Barbara Boxer. Tuesday’s ballot initiatives, however, indicate that too many Californians are along for the ride.

San Francisco provides a compelling example of these suicidal policies. Since 2000, the city has gone from paying $383 million for health insurance, pensions, and Social Security to shelling out $890 million this past year. By 2013, the total is expected to increase to a staggering $1.4 billion dollars. There is no conceivable way in which the city can maintain this rate, so Proposition B was introduced to require city employees to pay more for these benefits. Naturally, it was easily defeated by San Francisco’s notoriously liberal voters. The sponsor of the bill, Jeff Adachi, accurately summed up the dire situation. “My sense is that this is just the first chapter in a book that is going to end with bankruptcy unless we take the steps that were suggested in Proposition B.” In fact, Mr. Adachi is slightly off-target. California passed the first chapter long ago; what we are soon to witness is the denouement.

Another state-wide measure to prevent bankruptcy was eliminated as voters approved Proposition 25, which annulled the sensible requirement that two-thirds of the California State Legislature must vote in favor of the state’s budget in order to enact it. Now, the already venal state government can more easily produce haphazard spending to benefit its favored recipients. It comes as no surprise that, as seen on Ballotpedia, the main donors to Proposition 25 were unions- California Federation of Teachers, AFL-CIO, AFSCME, and the SEIU being the primary culprits. Likewise, Proposition 25 will enable Democratic legislators (as well as Republicans in this state) to indiscriminately raise taxes to fund the policies which are destroying a once great state.

Tuesday’s national election results highlighted the overwhelming discontent with the rate of government growth and spending- everywhere but in the Golden State. Despite the state’s well-documented and inevitable path towards bankruptcy, the voters once again favored the same politicians and the same policies which have steered them towards disaster. In many ways, California appears to be abandoning the American model for growth and prosperity and is succumbing to the failed French and Greek socioeconomic model, where special interests, bureaucracy, and unions have crippled free markets.

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