I’ve posted before on the ongoing fiscal problems in California, which faces massive budget deficits (see here and here, for example). Predictably, the politicians responsible for running the state have been unable to summon the political fortitude to make the combination of spending cuts and revenue increases necessary to balance the state’s budget — even though the state has taken $8 billion in federal stimulus dollars and shamelessly employed the most brazenly bogus gimmicks to increase revenue for this year. Equally predictably, California is now turning to Uncle Sam for help. California is asking the federal government to eliminate the “unfunded federal mandates” that apply, to guarantee California’s debt instruments against default, and to increase Medicare reimbursements, among other things.
What’s interesting about the linked story is not that California has its hand out to the federal government — after all, with so many big banks and car companies and mortgage companies and other entities getting bailouts, why shouldn’t states join in the fun? Instead, what is interesting is the rationalization of California politicians about why the federal government should bail out California, too. California is the economic engine for the entire country, one of them says, and therefore it is in the national interest to help California get out of the ditch. Another complains about federal regulations that impose costs without providing funding.
Has California looked in the mirror lately? In reality, California’s penchant for extreme “environmental” regulations and ludicrous “consumer-friendly” laws have imposed enormous costs on doing business, which is one of the reasons so many companies have fled the state. Those regulations are classic “unfunded mandates.” And, those regulations have affected commerce in other states, because businesses that want to sell a widget to the California market don’t want to build one set of widgets to sell in California and another to sell in the other 49 states. Rather, those businesses build one product that complies with California’s draconian regulatory regime and costs more for everyone else as a result.
I like California and have many friends there, but I think the state should be forced to deal with its crisis without getting federal bailout cash. California’s current problems are entirely self-inflicted. Any state that has 9,223 former state employees earning state pensions of more than $100,000 per year (to cite only one example) has been poorly governed and still has cutting to do. If the fiscal crisis causes California legislators to finally realize that California residents who want to attend California’s colleges will have to pay a bit more, that state workers will have to take salary cuts and receive leaner benefits packages and be laid off, and that the state should take a hard look at some of its regulations and laws that have driven away employers, then the fiscal crisis will have served a salutary long-term purpose. Americans in states like Ohio should not have to subsidize the bad management and profligate spending that has characterized California politics for decades.