01-28-2009, 11:52 AM
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#60 (permalink)
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Junkie
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In today's IBD on the editorial page:
Quote:
Budgets: California's politicians have played Russian roulette with the state's future, nearly bankrupting it in the process. Now, it looks like they might get bailed out from the problems they created.
The Golden State expects a record $42 billion deficit over the next year and a half, the largest pool of red ink ever in a state. Can it plug such a big fiscal hole? Maybe.
Gov. Arnold Schwarzenegger has pushed a wide range of new taxes — excuse us, "fees" — on everything from golfers and car repairs to veterinary care and tickets to sporting events. And now, the $825 billion stimulus bill may bring billions more to California.
The stimulus will dole out about $200 billion to the states to help shore up their budgets. California is slated to get $22 billion of that.
Is that a good thing? Probably not. It's not aid, per se; it's a bailout. Basically, California's irresponsible, Democrat-dominated legislature has spent the state into near fiscal oblivion. Now it will get bailed out by its big-spending friends in Washington.
So expect more fiscal irresponsibility in California, not less.
We'll give California's governor credit: He's tried to trade relatively small fee increases for bigger cuts in spending. And he recently vetoed a proposed massive tax hike by the Democrats.
But none of this is stimulus. It's anti-stimulus. In California alone, new proposed taxes — sorry, "fees" — will kill thousands of jobs, and likely send even more businesses fleeing to friendlier states.
According to the Milken Institute, California's business costs in 2006 were 22.9% higher than the average state. Taxes were 21% higher. Now, new green rules to cut C02 emissions will only make things worse for businesses, which are leaving the state in droves.
As for the budget, California's debts are already at junk status after a decade that saw spending soar 134% to $131 billion.
Last year, 132,000 people — many of them middle-class entrepreneurs — pulled up stakes and left the state. Just imagine how low the state will sink after more businesses flee to states with stronger budgets, fewer regulations and lower taxes.
As we've noted before, California got into trouble just five years ago. Then-Gov. Gray Davis lost a recall election because of the state's energy crisis and its failure to produce a balanced budget.
Since then, the governor and legislature have had five years to get their budget house in order. They've failed.
Yet, they may get bailed out of trouble. Too bad. It would be far better for the state to deal with its deficit honestly by addressing the runaway spending that caused the problem — and not by pretending things can be patched up with bailouts and tax hikes.
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There you have $22 billion of stimulus money going into a black hole.
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