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  • Morning Bell: California's High Tax, High Spending Disaster

    The progressive movement suffered a major defeat this Tuesday when California voters rejected all five tax raising measures on the ballot, four out of five of them by nearly 2-to-1 margins. The vote clearly shows that even in one of the most liberal states in the nation, there is an upper limit to how high Americans are willing to be taxed.

    The response from the new online left has been largely mute, but Mother Jones blogger Kevin Drum did try and spin the defeat this way:

    Historically, California has been a high tax/high service state. That’s fine. Some states prefer a low tax/low service model. That’s fine too. (It’s a lousy idea, I think, but fiscally it’s fine.) But over the past few decades we Californians have somehow concluded that we can be a medium tax/high service state. It’s a fantasy.

    The only fantasy here is that California is a ”medium tax” state. While it is true that Proposition 13 has limited property tax collections, Californians still paid a combined $1,030.60 in per capita state and local property taxes. According to the Tax Foundation, this places them 28th highest nationally. But property taxes are just one source of state revenue. In other taxing categories, California either leads the league or is in the top 10 nationally, including:

    So if low taxes are not to blame for California’s huge deficits, what is? Spending. The Reason Foundation’s Adam Summers details California’s government spending explosion:

    When Gov. Pete Wilson took office in 1991, the state budget was $51.4 billion. When he left eight years later, it was $75.3 billion. After five years of Gov. Davis’s administration, the budget had jumped to $104.2, and after another five years under the stewardship of Gov. Schwarzenegger, it has continued to increase significantly to its present level of $144.5 billion. In just the last 10 years state spending has nearly doubled, increasing approximately 92 percent.

    Already California’s leaders are pressing the Obama administration for a federal bailout to cover their massive deficits. Don’t expect spending cuts to be part of any Obama plan to fix the Golden State.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    34 Responses to Morning Bell: California's High Tax, High Spending Disaster

    1. Jack Lohman says:

      California’s budget problem is caused by the same thing as in every other state; a corrupt political system. Only public funding of campaigns will begin to solve it.

      Taxpayers pay legislators to spend money wisely, but special interests fund their elections to achieve just the opposite. And they do. Cash contributions divert taxpayer dollars, thus robbing from their intended purpose (schools and fire and police departments), where replacement tax money is then needed.

      The insurance industry contributed $46 million to politicians in 2008, and has succeeded in compromising our Democrats in the Senate Finance Committee. They have blocked all consideration for a single-payer healthcare option, which is vitally needed to keep US businesses competitive with the rest of the world. But it replaces the 31% of waste generated by the insurance bureaucracy. Unfortunately the politicians have to run for re-elections and the special interests transcend the elections.

      $46 million was a big investment because there is much profits to be had from a private health care system.

      Jack Lohman
      http://MoneyedPoliticians.net

    2. Dennis A. Social Cir says:

      This is another example that the people are getting tired of paying taxes. i just hope this is a sugn that people are going to put the dems in the street in 2010. When obama has to raise taxes to pay for the spending that he and the dens deemed necessary to pay for the supposed health care and the bail out for the banks and auto industry. We will again see the jimmy carter years with inflation and high interest rates on mortgages. All of the people that voted for "hope and change" will see the mistake they made.

    3. herby1966 says:

      I have to agree with Dennis, except that the difference between Bam-Bam and Jimmy is that Jimmy did love this country, though he was not the sharpest knife in the draw. Bam-Bam knows exactly what he is doing and that is to turn us into the next USSR as fast as he can. HE hates who we are and seeks to punish the best of us and praise the worst, just look at the company he keeps. Semper Fi.

    4. William Cole - Texas says:

      An old saying about guns hold true to anything the government at any level is doing in these modern times.

      "Gun Control Is Not about Guns, It's About Control"

      Substitute any word or phrase in place of the word gun and you'll see the long term plan your government has for you.

    5. Ozzy6900, CT says:

      CA does not need a bail out, they need a "kick out"! Kick out all the illegals back to "O'l Mehico" and that will save millions of dollars! Next, stop spending so darn much on everything! That will mean cutting the "free-be" stuff but the illegals will be gone so they won't gripe! Lastly, get rid of CA's Circuit & Supreme Court Judges. They do nothing to help you! They just tell you that you don't know what you are doing and rule in favor of all the small factions. That costs CA millions of dollars, too! Lastly, get rid of all of your politicians starting with Nancy Pelosi and lower your tax rate on the businesses and corporations that are providing you with jobs. Maybe THEN, CA will be able to recover!

      Maybe teh rest of the USA should do the same!

    6. Ken St. Amour, Rhode says:

      When our President sits with the President of Iran I hope he carries a big stick. These folks are touting the US and this administration is living in a dream world. By virtue of their announcement that there exists a medium range missile capable of reaching Isreal and/or our military installations in the middle east should be proof enough for Mr. Obama. "Peace through Strength" Mr. Obama.

    7. ra,ohio says:

      I agree Ozzy, 2010 can't come too soon.

      The voters in California should be an indication to the rest of the country that one of the most liberal states in the nation are sick of the ponderous restrictions and taxes imposed upon them.

      I hope we are seeing a revolution in the making.

    8. Rich, San Diego says:

      California voters have been sending a clear message to Sacramento for years. Remember, this is the state that passed Proposition 13, recalled a big spending governor, voted for 2/3 majority approval of tax increases, and with Tuesday's landslide, rejected five ballot propositions to bail out irresponsible politicians with increased taxes.

      What's amazing is that the political establishment in Sacramento and Washington believe that expanding government with more taxes and more borrowing is the only possible way to govern. One wonders whether anyone is seriously thinking about controlling the cost of government.

      Apparently, our politicians forgot that California Republicans, Democrats and independents joined to remove a Governor from office in order to reel in the Legislature and reduce runaway spending. Tuesday, the celebrity Governor who promised to take on Sacramento saw the result of his broken promise to the people of California.

    9. Sandy Oxley, San Fra says:

      California has the highest population which means more people in need of more services. Be that hospitals, road improvements, airports, schools and so forth. Due to so many wanting to live or work here it is only natural to collect taxes accordingly. If an area is a hot spot we all pay more to get and stay there. Meaning, we should also be paying the highest tax rates until all are paying their fair share. Taxing the church and reversing Prop 13 would reduce the tax demand on the rest of us.

      Businessess who want to reap the benefit of California work force, geograhical location or laws should be a good corporate citizen and pay taxes accordingly. As more people seek to reap the benefits of living in California but decline to contrbute the rest of us subsidize them. Which of us can afford our own fire and police protection or operate an airport, hospital or school? which of us will repair the roads or extend utility services to new developments as more move to California?

      Anyone who beleives the problems assocaited with population growth can be blamed on a political party, a minority or the courts is failing to admit their own culpability or does not comprehend the issue. With California having some of the most desired and thus expensive real estate in the country just imagine the budget surplus we would have but for the self serving proponents of Prop 13, churches being exempt from taxation and businesses using us but avoiding their tax liability by setting up shop in a neighboring state.

      If the conservatives are going to press for more people to be brought into this world they need recognize this naturally results in a greater demand for food, services, health care, shelter, jobs, schools and so forth. Assuming these demands can be met there is a cost associated. So, either get realistic and contribute or remain quite. My hunch is if we were to examine the tax returns of the biggest complainers we would find they pay a small percentage in taxes, if any, compared to the average citizen. So, where is the beef?

    10. Jake AZ says:

      those weren't progressive movement , they were the socialist-marxist and we the people have had all the Marxist Fairness we can stand, its time to take back America one state at a time.

      HI HO OBAMA HAS TO GO

      HI HO OBAMA HAS TO GO

      HI HO OBAMA HAS TO GO

      HI HO OBAMA HAS TO GO

      HI HO OBAMA HAS TO GO

      HI HO OBAMA HAS TO GO

      HI HO OBAMA HAS TO GO

    11. J.C. Hughes, Texas says:

      As I've said before, California is the fiscal model that the Beltway Demagogues are trying to force down the throats of financially conservative States.

    12. ella quinn kinston n says:

      I agree with ozzy send all the mexicans back to mexico.Also we need to stand by israel. Obamba needs to get tough.He wont though.He does not care about israel,or america.

    13. Jonathan Seid, Willi says:

      A well meaning citizen finds a cold, shivering snake, picks it up and takes it home. Later the snake bites the well meaning citizen. Why did you bite me, asks the citizen. I'm a snake, replied the snake. You knew that when you brought me home. My point is whether it's California or New York or any other

      state, taxing too much and spending too much is a snake and I refuse to shed any sympathy on those who continue to bring the snake home. Seems to me that citizens who continue to vote in taxing and spending snakes, deserve what they get. Don't re-elect incumbent snakes and demand that the madness stop.

      That's one thing incumbents fear…not getting the votes they think they paid for.

    14. Ken, California says:

      Kevin Drum's quoted text about us wanting high services but low taxes ignores the basic question of value for money paid. "Are we getting our money's worth" from what the State is providing? The honest answer is NO.

      Take one of the basic municipal services — firefighting. It's been shown that bureaucracy has become so entangled and so overlapping and so lacking in process control that the result is the Santa Barbara fiasco two weeks ago. Then, a one alarm brush fire became a disaster for hundreds of families and injured firefighters as bureaucracies fumbled about who would answer the call…. whose budget would get the draw down.

      Before the last of the flames were out, Gov. Arnold was on the air promising Californians that there'd be more fires if they didn't vote yes on his tax hikes.

      Californians — well 2 out of 3 anyway — told him and the Democrats who control the legislature to get screwed. It's about time.

      [I think my mom would have ok'd that last paragraph.]

    15. NYstatehome says:

      Obama wants to take the bad fiscal policies that have destroyed a once solvent state that was once California. The liberal legislature and the free and open polices to continue to spend without a thought to where the financing would come from; it is only now that they are nervous that they will be unable to pay back the taxes that were withheld and will issue an IOU to the taxpayers of the state. The lawmakers and those liberal unions who constantly demand their pound of flesh, yet they refuse to compromise or change to allow the state to fix the issues and meet their fiscal and legal obligations.

      $14 billion deficit is a significant sum to have overspent their financial liabilities. They continue to spend at an alarming rate. Their income has gone up every year, but the rate of spending has gone up twice as much as the taxes they collect. This is probably true with most of the cities, counties, and states facing a budget shortfall. Their taxation is so high now that the businesses and the millionaires are leaving the state as they are as well in New York. The California citizens have demanded these programs that don’t work; they have relied on other states such as Arizona, Nevada and Oregon to share their energy planets with them at a high rate of interest. A friend who lives in San Jose monthly electric bill is over $700.00. How can the taxpayers sustain these type of expensive, pay their tax increases, increased price of fuel, increases in food supplies as the California businesses pass on their tax increases on to the public? The public ALWAYS pays the price of fiscally irresponsible politicians. We need to make them accountable.

      These tax and spend policies maybe a direct result of the high foreclosure rate that has hit so many Americans. When our politicians continued to take from the taxpayers at an alarming rate and as their living expenses have climb and they still have an obligation to pay their mortgage and car loans. Something’s got to give and it’s never the politicians. If we are expecting them to be fiscally responsible, who most are lawyer and wealthy who never had to balance a check. They’ve never had worries about money.

    16. J.C. Hughes, Texas says:

      Sandy in San Francisco. The problem with your utopian society is what it's doing to the rest of the nation via a potential bailout. And pleaseeee don't give me the lame argument about all states enjoying federal aid, which is nothing more than France's pre-revolutionary crumbs of cake. Rather than floating along with warm fuzzy thoughts of big daddy's government care, spend a little time in the trenches. Too beneath you? Then at least wake-up. Your beautiful world is a clouded dream of smoke and mirror demagogy.

    17. Steve, Michigan says:

      Sandy Oxley: The assumption of your comments is that it is only the state that can supply the "food, services, health care, shelter, jobs, schools." Throughout history (even recent history)however, that assumption is false. Mostly, people supply those things by themselves, at least here in the great middle. The basics of life are all provided more effectively and at less cost if we each pay our own way. It's a law of nature. I guess the people of California are starting to wake up to that reality. It will certainly be better for the people to relearn that reality now, rather than later when even more have been lured into overreliance on the state.

    18. NYstatehome says:

      William Cole – Texas writes: Gun Control Is Not about Guns, its About Control

      But isn't that what politicians do with everything? Aren't most of the laws passed about giving them more control and removing it from the taxpayer's? Aren't most politicians there because of money and power? The princess of pork has been drowning in her own self importance and has overdosed on power. I think her reign is coming to an end as Speaker of the House and those coming up for re-election in 2010 try to distance themselves from her to save their own re-election chances.

    19. Phil Davis, Florida says:

      When a country's morals decline, so do it's problems rise. When America raises it's children on the thought of being entitled, so goes the country. Californians finally had enough of the "haves not" getting it from the "haves." Governments naturally grow and create more jobs, more than the economy can handle. Fairly soon the government is the largest employer and taxes, taxes taxes grow and grow.

      The family is the bedrock of any nation and what is taught at home and at school is reflected in society. We are in this mess because of power hungry people pushing failed socialistic principals. Taking from the "haves" and giving to the "haves not."

      We live in such a lofty rich nation that some of our people have nothing else better to do than create far extreme ideologies. I'll bet if the far left eco freaks grew-up in South America they would not be the wacko's they are here. Can our nation have it too good? Appears to be the case, at least in my eyes. I can only draw from my days of hunger and despair when one had to be creative to survive, because no one was coming to the rescue. Maybe it's time for little to no rescue. Maybe that was what made America the greatest nation on earth when we had to be creative because no rescue was coming!

    20. Spiritof76, New Hamp says:

      To Sandy and all the liberals living in California,

      Please feel free to empty your wallets-all of it. All the Hollywood anti-American crowd can certainly come up with a billion or two if they empty every penny and every property they have. Of course, none of them will come forward for paying every penny that they earn as long as they can soak the hardworking people.

      Liberals are the last to pay what they owe. Look at all the tax cheats in the administration, some confirmed to their posts and some not. But they all espouse that government is not big enough!

    21. Ben C, Ann Arbor, MI says:

      Who wants to live in California? Not me. Michigan is just fine despite the absymal economy and Barry telling the auto industry what kind of cars we will build. We elect officials to provide basic services from State government – police, fire, schools, roads. The rest are entitlements that have become interpreted as "rights." Severeal years ago we had demonstrations from welfare mothers (ADC) concerning their "rights" to welfare. Self reliance and initiative are becoming a norm of the past.

    22. Mike Sheahen, Hickor says:

      Government elitists and statists, including Leftists, say they are opposed to and don't have any use for "old, antiquated, archaic, dangerous, oppressive, and out-dated ideas and ways", etc, and so they are the ones with the so-called "Progressive” new ideas and ways which include their mantras such as "the are no absolutes, there is no right and wrong" (with which they thus "throw overboard" those mean old means of navigating which consists of choosing which direction to move, knowing which direction one is or is not moving, and even whether one is "progressing" or not in what direction).

      However, what they say is so true. Indeed such government elitists and statists are full of it, as in the oldest, most antiquated, archaic, dangerous, oppressive, and out-dated ideas and ways in the history of human beings!

      Example, in ancient times on nearly every continent, such as the time of the pyramids in Egypt, what later became known as “the new world”, and Chinese emperors, a number of such rulers, as a result of their actions, brought about the end of many of those who followed them, including their societies.

      Since then we’ve had many more examples of such ruination, including now in California's high tax, high spending disaster, resulting from years under the control of government elitist and statist power and money-grabbing big tax and spenders, whether "Democrat" or "Republican" or whatever, leading to their taxing as if there neither is nor should be any limit to what the people do and should be willing to pay, and spending as if deficit spending (spending more than is coming in) is justifiable, and altogether indeed as if such taxing and spending is fair, just, and should have no consequences including bankruptcy.

      So now you watch! The Left, including Obama and his "The Republican Party must move to the Left" pals including Schwarzenegger, are going to use the Constitution as if it’s toilet paper again, further "remake" us out of our representative government, and again act as if it's justly and responsibly possible to dismiss, overrule, and eliminate the consequences of irresponsibility, and force all of us, in all 49 of the remaining states, to pay the price and the consequences of their actions.

      In short, we can all kiss more of our freedoms, resources, and security "goodbye" because of California's high tax and high spending irresponsibility which is the hallmark of government elitist and statist power and money-grabbing politicians and their bureaucrats, and the assistance of their accomplices and flunkies in academia, the media, and elsewhere.

    23. Ron, Derry NH says:

      I just don't see this as a change for California. Once again they are not taking responsibility for their own mess and are hoping the federal government will bail them out; much like a child that just crashed daddies car into a tree and is hoping daddy will buy him a new one as he still is living fast and free.

      Think Bueller's day off and California just did what it usually does and let some one else pick up the tab for their excesses.

    24. lee, arizona says:

      MAYBE, JUST MAYBE OBAMA WILL WANT TO BUY CALIFORNIA FOR FUTURE RETIREMENT PROPERTY!

    25. Pingback: » Financial News Update - 05/21/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    26. David VanNorman Wi says:

      Maybe Calafonian's are tired of paying for housing clothing giving medical care and schooling to Ileagels. Paying for crazy environmental BS . Having all that oil of there coast and not drilling for it. It would mean jobs and lower taxes.

    27. mactx says:

      THANK GOD FOR DICK CHANEY. HE SURE TOLD THE TRUTH.SOONER OR LATER OTHERS WILL WAKE UP.I ONLY HOPE IT'S NOT TO LATE. RUSH AND ALL THE OTHER RADIO SHOWS DO POSE A THREAT.MABE WE NEED TO BUY SOME TIME ON ONE OF THE OTHER TV SHOWS SINCE THEY DON'T WANT TO HEAR THE TRUTH OR AIR IT.THE ONLY THING THAT GET'S SOMEONE'S ATTENSION IS MESS WITH THEIR MONEY.WE ARE GOING TO HAVE ALOT OF PEOPLE WAKEING UP AT ONE TIME WHEN ALL THESE NEW CHANGES HIT.GOD ONLY KNOWS WAT'S NEXT WE WILL ALL STICK TOGATHER. WE WILL MAKE THE PROPER CHANGES.

      I DON'T THINK THE NEXT KEEPERS WILL BE DEN OR REP

      IT WILL BE PEOPLE THAT CARE ABOUT US AND OUR COUNTRY.WE ARN'T TO BIG TO FAIL BUT WE ARN'T TO BIG TO CARE. GIVE UP THE GREED AND DO WAT'S GOOD FOR THE U.S.A. GOD BLESS

    28. mactx says:

      WITH THIS NEW ADMISTRATION IT DOES GIVE HOPE AND CHANGE A NEW MEANING. WITH ALL THIS TAKEOVER ALL THE JOB LOSS ALL THE NEW TAXES OUR ELDERY WHO WANT TO PRESERVE THEIR INDEPENDCENY THAT THEY WILL LEAVE THIS WORLD WITH.

      THE NEW MEANING NOW HAS CHANGED TO I HOPE I HAVE ENOUGH CHANGE TO MAKE ENDS MEET. GOD BLESS.

    29. Pam, Benwood, wv 26 says:

      Thank God for Dick Cheney and Rush Limbaugh. i don't want flowery speeches. I want the TRUTH.

    30. tom coal valley says:

      it is no wonder people and business's are moving out of california in droves. the liberal tax and spend democratic party will take this country back to the good ole day's of Jimmy Carter. The defeat of the tax increases is a good start but we need to take back the majority of the congress and senate to eliminate this insane agenda these folks have.

    31. Pingback: Krugman; The Roots of California's Crisis. - Politics and Other Controversies - Page 3 - City-Data Forum

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    34. Bryan@Turbotax says:

      I found this old blog post while looking for tax information in california and it's amazing that since 2009 this is still the case. It doesn't matter who we vote for governor because I guess theyre going to do things the same old way anyhow!

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