Monday, June 23, 2008

Uber Alles Redux


California, California, California. Why does everyone bring up one State of 50 whenever they want to make a point? If sub-prime was the tip of the iceberg for housing problems then housing is the tip of the iceberg for California. The government doesn't realize it but the productive class is in near revolt. Highest gas prices in the nation on the lowest energy content fuel in the nation with among the highest taxes. High taxes? Federal plus 9.3% State and ~8% sales tax on near everything. Overegulation and infrastructure deficits that rival the GDP of major nations. Social programs that would never withstand a popular vote and but a few shreds of populism left protecting the now captive middle classes and business sectors from outright socialism. With the prospect of a single party veto proof Legislature in a few months there exists a very real possibility of economic meddling that will make Smoot-Hawley look benign. Housing soared because it was a rare niche beyond the grasp of politicians. The Golden State in subsequent decades has taxed and confiscated and charged everyone and everything in sight and still is not satisfied. The prospect of 15% budget reduction directly from the housing bust and another 10% in ripple effects to tax receipts after a decade of taking on excessive debt and compounded deficit spending is an event that could collapse the economy. That's a big statement but the Federal courts have already taken over the state prison medical care program and are spending $7 billion of unbudgeted additional money to fix the problem. Add that to a structural deficit of $17b and a deferred spending gimmick of $6b and a likelihood of $8b less revenue next year and there's a perfect storm here now.

That's why people always talk about California. Sometimes it takes time away to see just how screwed up things have gotten. Boiled frog syndrome.

13 comments:

Aaron said...

first, murst, etc, yada yada yada.

Casey Serin said...

The state can vote to legalize prostitution and tax the hell out of it. Male prostitution, preferably, so I won't have to conduct my business in the back alleys anymore. ;-)

Rob Dawg said...

Yeah, as if you pay your taxes.

Casey Serin said...

Touché, Robbo... you win this round, but I'll be back. ;-)

serinitis said...

I believe California is about 20th in ranking of State and local taxes. Above average, but not by a lot. Where we really get nailed is Federal taxes. California pays much more in Federal taxes than most states.

Akubi said...

I've been fascinated with the Laura Richardson drama, because I think she personifies what is wrong with California these days.

Tach said...

BTW, the boiled frog meme is a myth. Put a frog in water and heat up the water. The frog become unhappy with the heat pretty damn quickly.

Lex said...

It's not all bad. You guys did get Joe Torre.

Akubi said...

What's up with Lou?
According to Blogger he no longer exists.

Akubi said...

@Dawg,
Although you rarely comment on my main Absurd Random Crap blog, I suspect a riff on last night's DK post...

Funny Circus Bears said...

Just back from holiday and I see, like Akubi, that Lou up on blocks.

Too bad. Hope all is well with the old sod.

Peripheral Visionary said...

"I've been fascinated with the Laura Richardson drama, because I think she personifies what is wrong with California these days."

Safe seats, that's what's wrong with California, or at least California politics.

In all fairness, the same is true of virtually every other straight-party-ticket-vote state, be it Massachusetts or Utah. The corruption is virtually inevitable, as voters would rather vote for Boss Tweed from their own party than a respectable politician from the opposing party, and not surprisingly, sooner or later their politicians start looking an awful lot like Boss Tweed.

There are a lot of criticisms of the two-party system, but for all of its weaknesses, it's a whole lot better than the one-party system.

Rob Dawg said...

PV,
How many times have you heard me bemoan the de facto single party system in California? Wait until the budget circus that starts in 10 days. BTW, the budget is Constitutionally required in 6.