Thursday, January 15, 2009

The Governator Gives Us All A Peek Into The Future

Today,Governor Arnold Schwartzenegger delivered the obligatory `state of the state' speech. It's something Americans in general should take careful note of.

It was extremely short,and about half of it consisted of rah rahs, thank yous and comments on Obama's upcoming inauguration, but then the Governor said that he wasn't there to give the traditional State of the State address there today.

Boiled down to essentials, here's the gist of what he had to say:

1) The State of California, the eighth largest economy in the world is in a state of fiscal crisis and faces insolvency in a matter of weeks.

2)That the $43 billion dollar budget deficit precludes doing any other state business until the legislature comes up with a budget that addresses that little fact.

3)That partisan warfare had poisoned the legislature, but that it was time to move beyond that to work together to solve California's fiscal crisis. The Governor did not go into specifics,but the clear implication was that Democrats would have to accede to cuts that affected the public employee unions and their pet programs and Republicans were going to have to give on increased taxes and fees in a state that is already one of the highest taxed in the US!

Needless to say, Governor Schwartzenegger caught a major load from the media for not providing any specific plans, for not saying anything substantial and for being incompetent and responsible for the state's fiscal woes in general. One smarmy talk radio host referred to it as a "doughnut speech..all powdered sugar with a hole in the middle."

I'm not the Governator's biggest fan, but I can't imagine what they expected him to say. All he has to do is mention a specific area that he wants to cut spending on in public , and the Democrats who rule the State legislature will get the phone calls from whatever special interest group is involved and come out with a public response saying that it's impossible,that they will never agree to it and that Schwartzenegger is a Nazi for even suggesting it.

At least in private, he has a shot at proposing something they might actually agree to.

California's legislature is essentially run by the Democrats, who have an unassailable majority thanks to some fairly shady redistricting. They also hold every major state office except the governor's chair. They also run well entrenched political machines that control the two of the three largest cities in the state.

California's Democrats are absolutely addicted to spending and for a long time they were able to get away with it because of the influx into California from the rest of the country and the state's cut of record high real estate prices, onerous taxes on the huge amounts of gasoline purchased because of the suburban commute in many area and hefty taxes and fees on income, vehicles, businesses and just about everything else you can imagine.

At this point however,the booze is gone, the women have left the building, the place is trashed and the party's over.

Businesses are actually leaving the state because it's so difficult and costly to do business there, and for the first time last year more people left California than arrived here from the other 49 states.Meanwhile ,the population and the demands on the state's infrastructure and services actually grew because of the influx of illegal aliens,the costly five-hundred-pound gorilla in the room nobody wants to mention.Los Angeles,San Francisco and several other California locales have passed laws to become 'sanctuary cities' for illegal aliens,which means that they won't cooperate with ICE in any way, so that drain on the state's resources is not going away anytime soon.

The real estate market and the many associated industries it fed is in a tailspin, without an end in sight. Foreclosures are at record highs,and the Democrats in the legislature passed laws that make it risky and prohibitive for investors to buy foreclosures, so even the handful of properties that actually have equity are sitting there.

Because of the insane spending and indebtedness,not only is the state's credit rating at an all time low but the usual bridge loans the state has had access to in the past are out of the question...and the state's other recourse, drastically raising taxes, will simply increase the exodus of businesses, entrepreneurs and a good chunk of the population actually paying taxes who can see their way clear to leaving.

The Governor makes a convenient scapegoat,but the reality is that he's actually been a somewhat moderating force at the orgy, and has at least whipped out his veto pen now and then...most recently when the Democrats in the legislature tried to violate the state constitution and sneak a whole slew of taxes and fees in without the required two thirds majority.

And I would also point out that the Governor during his first term put three initiative propositions on the ballot that would have actually helped break this cycle...but the public employee unions and the Democrats were able to defeat them and keep the status quo in place.

So at this point,either government employment and services get slashed deeply or taxes get raised to the stratosphere..or more likely,both.

Schwatzenegger's relatively powerless to affect which way things go, and in any event he'll be gone in 2010, and a Democrat will likely control the governorship and remove even that modest safeguard.

So,you say, I live in Indiana. Why is this stuff relevant to me?

Simple. California is usually ahead of the curve on these kinds of trends..and in five days, we're going to inaugurate exactly the same kind of political set up on a national level - but with the single exception that the Feds can print their own money and make things even worse.

Hasta la veesta, Bay-bee....and don't say you weren't warned.

1 comment:

Anonymous said...

While the feds can certainly print their own money, this is not a good solution. Simply turning on the printing presses will likely lead to hyper inflation. While Congressional pay and the Congressional pension plan is indexed for inflation, it is unlikely that they can vote themselves raises fast enough to keep up with hyper inflation. In other words, simply printing more money runs the risk of putting Congressional members as well as the voting public in the poor house. In addition to this, it would devalue the dollar even more than it already is. The foreign governments and the institutional investors who buy the T-Bills and Government bonds that keep the American Government afloat will very quickly debase Obama and his incoming team of the idea that they can simply print more money.

The bottom line is the big social programs they envision simply are not possible. If they have not figured this out already, they will very soon.

Actually, if I did not hold the left in such utter contempt, I would feel sorry for them. You see they have been trying for decades to gain control of the United States government. They finally succeeded only to find out that the folks who controlled it previously messed things up so royally that most of the programs they envisioned for when they controlled things are not possible.

There is one thing that they can and will likely do. That is to put their arch enemies George W. Bush and Dick Cheney in prision. Did they do any thing wrong? It doesn't matter. The voting public holds those men in utter contempt. I suspect there is about a 99.50% chance that George W. Bush and Dick Cheney will be living out the rest of their lives in Federal prision within year. This is about thing they will be able to implement.