According to The New York Times on-line, Governor Jerry Brown disclosed in a video posted on YouTube that the state's shortfall was now projected to be $16 billion, up from $9.2 billion in January. He said he'd propose a revised budget on Monday to deal with it, stating, "We are now facing a $16 billion hole, not the $9 billion we thought in January. This means we will have to go much further and make cuts far greater than I asked for at the beginning of the year.”
The budget shortfall increased dramatically in the last six months, forcing state officials to assemble a series of new spending cuts that are likely to mean further reductions to schools, health care and other social programs already battered by nearly five years of budget retrenchment, state officials announced on Saturday.
At the same time, the deficit projections -which have been increasing since Mr. Brown and the Democratic-controlled Legislature approved a budget last summer- suggest that the state may have been overly optimistic in estimating what kind of revenue it would take in. Even though Mr. Brown, in taking office last year, pledged to end what he said were the tricks lawmakers regularly used to paper over budget shortfalls.
The reason I mention California's dilemma is because the state has been a bastion of taxing and spending for decades, and as such clearly demonstrates that by turning economic principles upside they've broken their own fiscal back. The government employs some thirty percent of the workforce, providing extensive benefits which include significant sums to retirees.
Now, while all of these benefits and perks sound extremely good when promised, in reality they disregard one hugely important question: Where will the money come from to pay for it all? And that's the rub. Because due to egregious taxation, environmental restrictions and over-legislation, most real industry, and therefore tax-revenue employers, have left the state to prosper elsewhere.
So, here we have an actual model of what happens when politicians allow social causes and theory to take precedence over real-world considerations, such as revenue production. And in doing so, not only won't those expectant of huge benefits receive them in the future, they also face losing what they've already gained via legislation, because sooner or later if overly gratuitous laws aren't reversed the state will be totally bankrupt and consequently paying no one at all.
Therefore, the lesson to be learned here is that free rides aren't really possible at all, no matter how convincing politicians may try to appear. And when that fictional bubble bursts, things actually become much worse. Which is why others in the nation have now gotten a very clear picture from California of what to expect for the whole nation if the current administration is elected again.
That's it for today folks.
Adios
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