There are some very smart people who believe that California has already fallen off the fiscal cliff and that it’s too far gone to be saved. A great deal of evidence supports that view. One need only read the alarming commentary from California’s Legislative Analyst to understand that our political leadership has led us into a box canyon with no visible means of escape.
Other causes of the state’s dire situation are well known to any Californian who is paying attention. High taxes on income, sales and property transfers are main drivers. Add to that an openly hostile approach to businesses via regulatory burdens, predatory litigation, government fraud costing billions, and hundreds of billions in state and local debt reveals that our state is consuming a toxic brew of bad policies.
The answer from the left is straightforward – double down on those same policies that got us here in the first place. But that cure would be worse than the disease and would simply increase the rate of spiraling down the fiscal commode.
Since our elected political leadership in Sacramento routinely ignores the sage advice from the Legislative Analyst, some have suggested a far more radical cure: Bankruptcy.
If having California declare bankruptcy sounds extreme, it is because it is. Although current law does not permit states to declare bankruptcy, David Crane, president of Govern for California, believes it is “a feasible, albeit long-shot, solution that offers the state a chance to halt its budget meltdown — something California’s current political leadership has not had the courage to do.”
Crane is right about the lack of courage (or sanity) on the part of the political elite, but the odds of getting agreement in Washington to advance a change in federal bankruptcy law makes betting on a snowball’s chances in Hades look like a sure thing. Moreover, a federal statute allowing the states to declare bankruptcy would raise federalism issues under the Tenth Amendment.
So, if bankruptcy is off the table, is there a better way to stop the spending addiction? For addicts, there are treatments and various 12-step programs galore. But, with the discipline that we all acknowledge is missing in Sacramento, the right leaders could put a stop to this quickly. After all, some alcoholics come to their senses and have the will to simply stop drinking. For California, radical reductions in spending would be the equivalent of going cold turkey.
The above may sound naïve, but a sudden dose of realism is at least slightly more realistic than bankruptcy. If political leaders in California are looking for a road map to return to fiscal health, Glenn Youngkin’s four years as Virginia’s governor would be a good place to start.
An editorial in the Wall Street Journal last month, entitled “Youngkin’s Strong Virginia Legacy,” posits the question, “Can a Republican Governor make a difference in a state dominated by a Democratic Legislature and left-leaning voters? Virginia Gov. Glenn Youngkin has done it in his single term, and he’s leaving his Democratic successor with a strong economy and fiscal gusher.” While California continues to pile on debt, Virginia rose to third from 14th among states with a AAA credit rating for rainy-day fund balances as a share of general fund expenditures.
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It’s hard to find fault with this message. If it were embraced by more of our political leadership, maybe we could take the bankruptcy option off the table.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.
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