Sunday, May 13, 2012

California's Race to the Bottom

California's budget deficit is now estimated at $ 16 Billion, instead of the $ 9.2 Billion estimate that held sway as recently as January.  They kind of missed that one.  Maybe they "overestimated" the revenues they would get from the variety of new taxes that they have imposed.  So, what's the answer?  More taxes says Governor Jerry  Brown, referred to as Governor Moonbeam by most of his constituency.  According to the LA Times this morning, "...revenue in April ... fell far short of expectations, leading to a shortfall of at least $ 3 Billion in the current fiscal year.  The state has also spent $ 2.1 Billion more than expected..."

Huh?  Three months later, the deficit is $ 7 Billion higher than expected?  Was this an accident or the result of a calculated deception designed to fool the voters into believing that Governor Moonbeam and the Democratic Legislature had a balanced budget?  It increasingly doesn't matter whether Governor Brown is duplicitous or incompetent.  Either way, you reach the same destination -- the bankruptcy of the State of California.

I suspect that Governor Moonbeam's solution will be more of the same.  Why not?  Increased spending and increased tax rates.  Maybe they can get the deficit to $ 25 Billion before weary bond investors get the idea and join the Greek bond investors on the sidelines.

Expect Governor Moonbeam to begin the "fairness" discussion.  As unemployment soars past 10 percent in California and the deficit blows through the roof, the Governor can follow Obama's example and change the subject.  Maybe discussing gay marriage and demagoging tax fairness will solve the unemployment and fiscal problems of California, but not likely.  But, distractions often win elections, since voters all too often fail to do the math.

California citizens have the government they wanted and voted for.  Bankruptcy lies ahead and economic chaos for the Golden State -- not Golden any longer.

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