Skip to comments.California, Socialists, and the Debt Bombs; Iím pretty sure I know how California will fail.
Posted on 07/11/2018 8:19:42 PM PDT by SeekAndFind
Im pretty sure I know how California will fail.
I dont know exactly when it will happen, but after the result in the Democratic primary in New Yorks 14th Congressional District two weeks ago, the Golden States rendezvous with fiscal perdition is going to happen sooner than we think.
Lets talk about the how.
Californias foundering wont be precipitated by a single catastrophic event. Apart from the threatened CalExit, voter initiatives to partition the state, or the Big One shaking us into the Pacific, it wont be the equivalent of a sudden, unexpected stroke on a random Tuesday that brings the state down.
Instead, California will fail in the way an elderly person with pneumonia fails. It will be a systemic, protracted, and spiraling demise; a sniffle becomes a fever that leads to a cough that turns into a chronic wheeze that results in - The End.
A couple of facts make me certain of this.
First, Californias Democratic Party rulers, already in an apoplectic lather about the Trump administration, are going to boil the statistics and demographics and distill exactly the wrong lessons from the young Democratic Socialists victory in Brooklyn.
They will conclude that the big S socialism Uncle Bernie dragged out of historys root cellar is a more broadly sellable political commodity if properly packaged. Like a political Rorschach test, those who want to see it will view the results and determine voters energized by the wild-haired Vermonter are still out there and will turn out on Election Day to support an openly socialist candidate, particularly if that candidate is a new, young, Latina face.
Break out your Mao suits and red-starred Che berets because for the American political Left, Socialism is suddenly cool.
And like someone who loves chocolate suddenly learning that eating more of it might be good for them, Californias uber-liberal Democratic vanguard will infer that universal healthcare, guaranteed government jobs, and an open border are winning issues. They will perceive a liberal riptide running just beneath the political surface and will be encouraged to do more of what theyve already long-aspired to do.
For example, nothing that transpired in Brooklyn is likely to convince the odds-on favorite to be Californias next Governor that his plan for universal, state-run healthcare isnt a political winner. On the contrary, the lesson will be that moderation isnt the path forward. Californias liberal elite will see its finally time for the Socialist full monty.
But these promises, like universal healthcare and its $400 billion price-tag, will accelerate Californias demise because to paraphrase Prime Minister Thatchers famous quip, Californias aspiring new Socialists have already run out of other peoples money.
Which brings us to the debt bombs.
The cities, counties, school districts, and myriad other local government agencies across the state have unfunded pension liabilities that by some estimates now total nearly $1 trillion. This sum represents money that has been promised to public employees in pensions and benefits that local governments simply do not have, and but for taxes, cannot get. The deals elected officials made with the public sector employee unions for labor peace or political advantage have compounded over time and now represent a liability of more than $60,000 for each household in the state.
The problem is that these obligations continue to compound and grow, and money needed to service them are consuming ever-increasing portions of local municipalities budgets.
Its a debt bomb, and cities up and down the state have them.
These bombs will explode when the money needed to pay pension and other legacy obligations exceed revenue.
Maybe youve already seen the effects where you live.
Like passengers on a sinking ship, cities are throwing the non-essentials overboard first. Maybe programs for seniors and after-school activities for kids in the town where you live have been cut. The problem is these things represent only a tiny fraction of most city budgets and will never be enough to stop the inevitable detonation.
Maintenance and capital will go overboard next. Service lives for police cruisers, city vehicles, and equipment will be extended. Ever wonder why the computer systems at City Hall are somewhere between ancient and East German surplus?
What about capital projects? Road maintenance, for example.
Forget about them.
If youre reading this in California, how is the pavement of the streets in your neighborhood?
Your city may be closer to The End than you know.
Unlike the state, Californias cities are effectively cash businesses. They cant borrow like the politicians in Sacramento can, so theres a straight-line correlation between money spent on pensions and benefits and a citys ability to pave streets and repair sewers.
Cities arent learning how to do more with less, theyre learning how to do less with less.
Which brings us full circle to the Golden States newly-emboldened Socialists.
Cash-strapped cities and local governments are already being forced to raise local taxes to maintain services while supporting their growing pension obligations. Voters are being asked to support parcel taxes to raise money to pay for new teachers because school district budgets have been overwhelmed by the pension obligations to the retired ones. Add another $400 billion program for universal health care and Californias sky-high taxes will become stratospheric. Other currently popular ideas like guaranteed government jobs and free college education will only add to that burden.
Economist Herbert Stein once said: If something cant go on forever, it wont. California, on its current trajectory and with its new Socialist-inspired leadership, cannot go on forever. There simply isnt enough money. The state will ultimately fail because the math says it has to.
Unfortunately, the city where you live is going to fail first.
When venture capital funds leave the Bay Area, it is over.
they are already leaving
Like all socialist governments, they will end up with the rich elite and those with connections to the leaders who all live in special economic zones, and a mass of people trying to make toilet paper out of the kelp that washes ashore and food out of the garbage of the elite.
gimme my free stuff!
You can’t have much of a discussion about the
impending California meltdown without including
the liberal high tech gurus and the Hollywood
Kingpins who are so proud of their handiwork.
The richer cities will hang on for a while yet but cities like San Bernardino have already disbanded their police dept. and contracted out with the Riverside County Sheriff dept.
This author may be right, but it’s a LONG way from now to failure.
CA is running a SURPLUS of over $10bil this year, even after all the extra spending. That’s on a budget of over $200bil. All debt payments are current and new borrowing is minimal.
State GDP is on fire. You have to hire trucks to haul all the money away.
That said, if they go after tech, ag and aerospace for more...this will go sideways FAST. Tech and aerospace can move.
They wouldn’t be dumb enough to kill agriculture, would they? This state is #1 in the nation in AG. By far.
Sadly, AG is usually the first casualty of communism.
And when it does, it will be capitalism to blame.
You actually havent driven the 5 and noticed the signs on the dried up fields that say Congress Created Dust Bowl? Or maybe they arent there anymore.....I havent driven that route in 9 years.
By the left I meant.
California will find some pretext to close its own borders so that people cannot leave the state.
I guess, but it’s been 15 years since I read articles about California being on the precipice of an imminent financial failure. Didn’t happen. Some of the same arguments were made back then.
Some things can’t be predicted timing-wise even though you are sure they will happen eventually. When will the Yellowstone caldera erupt?
Got my wife and kids out of Cali twelve years ago. We’re now firmly rooted and flourishing in Texas.
It’s like a whole ‘nother country.
Drought is over. All fields in production. Many of the dead almond trees have been replaced with olives...the right crop in comparison. In the Sacramento valley it’s green for 200 miles north of SAC, and 75 miles wide. Same with the San Joaquin to Bakersfield. That’s another 300 miles and 75 miles wide.
There’s nothing else like it anywhere in the world.
This Big Valley is still the most productive farmland in the world, by HUGE margins.
It is not at all a long way to the city pension collapse.
Fort Worth in Texas isn’t looking too good either.
All municipalities in CA subscribe to the state pension system...CalPers.
That system is in trouble, but it’s not severe due to the flood of money here. One day...maybe.
But as with all pension systems, one day the working and living just refuse to pay. They say NO MORE.
In my city we have 7.25% sales tax. The city just voted in a 1% increase. I’ll be this becomes common.
WTF could possibly go wrong?
CA tax payers have been looted and economically gang raped by these cities, counties and the state.
California’s debt is nearly $428 billion at the time of this comment. California’s spending is more than $576 billion.
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