PJ Media

Back to the Future with Jerry Brown at the Helm in California

I’ll start this out by saying that I grew up in Los Angeles, and I’ve witnessed a lot of change here in Southern California first-hand. When I was a youth, there wasn’t a single condo building on Wilshire Boulevard and then the New Yorkers came and, because they couldn’t get their minds around plots of land with lawns and gardens, high rise condominium buildings were built (in the land of earthquakes, no less, and you wonder why they get so scared whenever we have a decent-sized shaker).

As time went on, in my little enclave, I watched as the streets got full of activity where they used to roll up at 7:30 or so, and now things are open very late; traffic is here all hours of every day.

I came of age politically when Ronald Reagan took over for Pat Brown. Pat (apparently) did a pretty good job putting infrastructure in, but Ronnie got the state out of business’ way. After Reagan, we got Pat’s son, Jerry.

Jerry was, to put it politely, a disaster. Not only was he a creature of the unions, but he also enacted legislation that allowed the various unions to organize the state’s public workers, which began the end of the gold in the Golden State. The unions have since amassed hundreds of millions of dollars to influence elections via state worker contributions — and influence they have. More on this a little later.

During his tenure in office during the ‘70s, Jerry became most well-known for his ineffectual response to the Mediterranean fruit fly (the Med fly), which had infested the agricultural basket of the Central Valley. Only after tremendous damage to the agriculture of the state did a hew and cry go up, and he finally responded by spraying with malathion, a pesticide that he had his crews use over every last inch of the state, including densely populated urban and suburban centers, causing illnesses that could well have been avoided had he acted earlier (the hated DDT, used at the beginning of the infestation in the ag centers, would have done the job).

Jerry also presided over the beginning of the mass transfer of much money from local city governments to the state for it to then use as bribes and largess. The teachers union came into its own during Jerry’s term, and the state’s economy, which started out in a mess from the Nixon/Ford era, ended up even worse (10% unemployment) when Jerry was done at the end. This during a period of time when Ronald Reagan had turned the U.S. economy around and every place was booming but here (nationally, the unemployment rate had begun its decline nine months earlier but wasn’t followed in California until long after Jerry was gone).

Finally, he opened up the largess to immigrants, legal or otherwise, but mostly illegal. It is amazing how much of the state’s budget continues (despite one vote after the next to change the paradigm) to pay for schools and other services for people who shouldn’t be here in the first place.

The state’s finances have been in total disarray ever since. A saving grace has been a two-thirds requirement for a budget to be passed, which has allowed the adults to put something of a check on what would have been even more spending. Nonetheless, despite two stud governors (George Deukmejian and Pete Wilson), and then two disasters (the aptly named Gray Davis and then Ah-nuld-the-Terminator), things have gone from bad to worse to worst of all.

We in the Tarnished State are now among the highest-taxed in the country; here in L.A., there is a sales tax of 9.75%. It is little wonder that over the past decade there’s been a brain drain (except dopes like yours truly, always late to the game) with more than 1.2 million professionals fleeing for greener climes and pastures (read: cheaper places to live and work).

Since the financial crisis began, we have had one budget after the next in which there has been a deficit of around, oh, $20 billion or so. Much of the state’s fiscal problems surround bloated pensions owed to — you guessed it — state union employees … who are now beginning to retire in droves (and, probably, leave the state as fast as they can). It is an unaffordable problem; plus, spending on illegal immigrants continues to be intractable as well. Finally, because our initiative system has gone wild, there is mandatory spending for all kinds of things, including an education system that likely spends more per pupil than anywhere else in the country and gets worse results than anywhere else. I send my kid to private school in L.A. because the alternative is too awful to contemplate.

And, so, what does the reflective, educated electorate, which, for decades, has been at the forefront of every trend — cultural, political, and otherwise — do? In an election where the rest of the country vomited spending, taxing, and regulating, it elects Jerry Brown, the very architect, the builder, the brainchild of its original problems, to be governor. Again. Not only that, but this informed electorate also passed a ballot measure that confirms one newish/retreaded tax after the next (particularly the extra-special tax on small businesses) and changes the state constitution to require only a majority vote for passing a budget.

My friends, we are in deep, deep doodoo here. While the politicos argue budgets in the statehouse, without enough money to cover costs, the state has taken to issuing IOUs to anyone that was owed, including taxpayer refunds (talk about chutzpah!). Now, with all the shackles removed, without any political need to face up to budgetary problems, the state capital, with Jerry ensconced safely in again ready to sign any damned thing that comes down the pike, is going to pass budgets that will in no way be balanced. They’ll need to raise taxes, so they’ll tell us, which will push even more professionals and businesses out; they’ll issue more and more debt that carries lower and lower ratings, and costs more and more in interest … and there’s only one place that this all will end up.

Jerry has very few choices: he can face the problems — pensions and spending on illegals — or not. Anyone want to make a guess what he’s going to do? As a creature of the unions (which spent over $100 million getting him re-elected), does anyone seriously think he’s going to put the wood to them? At least we had some sense that Meg Whitman would have made an attempt.

If you own California state bonds or any municipals, sell them. If you hold IOUs, cash them in, ASAP. If those and some other very tough choices aren’t made, the state is going to have to repudiate some part of its debt. The ultimate impact of this will be felt nationwide — and, likely, even internationally. Sovereign debt of other out-of-control states (read: New York) will be dumped, people’s retirement accounts in state and municipal bonds, no matter which state has issued them, will be impacted. In short, it’s Moby Dick’s worst doomsday come writ, with Ahab at the helm.

One thing you can say: California will provide a good, leading example to the rest of the country about what the meltdown will look like when it comes about.

What in the world were we thinking?