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The Governator Wants Your Tax Dollars

In 2000, when I visited Vietnam to report on events surrounding the 25th anniversary of the fall of Saigon, beggars in the socialist paradise would follow me, a “rich” Westerner, everywhere I went. At the advice of my Vietnamese friends, I always shook my head to say no, but I had a weak moment at a downtown park in Hanoi after being approached by a woman carrying an infant. After giving her a couple bucks, other beggars around the park started making a beeline toward me. I ended up, literally, running down the street to get away from them all.


I recalled that scene in the wake of recent economic news. The federal government has handed out cash to the insurance giant AIG and agreed to pump $700 billion into the nation’s financial system to bail out struggling lenders. Now others are chasing after the taxpayer dollar. Beleaguered U.S. automakers got in on the deal also. As the Las Vegas Review-Journal noted in an Oct. 12 editorial, “[n]ary a soul squealed about the $25 billion rescue of U.S. automakers two weeks ago. … These days, $25 billion is the equivalent of pocket change spent at a garage sale.”

And if no one complains about 25 billion bucks, then why should anyone even mention the latest beggar chasing after a temporary taxpayer bailout – i.e., California Governor Arnold Schwarzenegger, who might seek $7 billion from the federal treasury to tide over our profligate-spending state for a while. This is the equivalent of an individual seeking one of those high-interest loans in anticipation of a federal refund check. It’s a sad commentary, but don’t expect anyone to learn the right lessons here.

The governor has since backed away from that emergency request, but Schwarzenegger’s letter to Treasury Secretary Henry Paulson captures the “blame someone else” sentiment common in Sacramento: “Like many other states, California is feeling the enormous effects of this crisis on our economy,” the governor wrote. “Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing.”


That’s priceless. We’ve got a state government that can’t say no to any sort of spending and a governor who blames the national financial mess for the state’s current mess. He predicts dire consequences if the state’s bloated bureaucracies can’t get a quick fix of taxpayer cash. For some reason, I don’t lie awake at night worrying that, say, the DMV or the state arts commission might be a little short this month.

Reason Foundation’s Shikha Dalmia, writing in the Wall Street Journal on Oct. 11, captured the absurdity of the Schwarzenegger poor-mouthing given that “days before penning his note [to Paulson], the governor told an audience at the commonwealth Club of California not to worry about the state’s budget crunch and to approve $9.95 billion in new debt on the November ballot to build a bullet train to connect Los Angeles to San Francisco: ‘Just because we have a problem with the budget does not mean people should vote ‘no’ on high-speed rail.’”

No one, especially a governor who is far more interested in being liked than in living up to his long-forgotten campaign promise to reinvent government, has any fiscal control in Sacramento or Washington. As the Orange County Register pointed out, “[a]s the governor and legislative leaders confer to discuss what to do [about the short-term shortfall], they know their recently adopted budget was projected from Day 1 to have a $6.5 billion deficit by next June, unless voters approve borrowing $5 billion from future lottery revenue.”

Meanwhile, the November ballot is filled with initiatives beyond the rail bond that would put additional strains on the state budget to fund everything from health care for children to alternative energy. Most of these proposals are the work of liberal interest groups, but Republicans are culprits also. Yet another costly law-and-order initiative is on the ballot, courtesy of Republican legislators (Proposition 6), as is a measure to expand the state contribution to a government-run low-cost mortgage deal for veterans (Proposition 12). Just what California needs… more subsidized mortgages!


Even if California gets past its crisis du jour, the state is in fundamentally bad shape because of endless promises government officials continue to make to the state’s large and surly class of government workers. The Wall Street Journal notes: “Like the auto and steel industries and Social Security and Medicare, local governments around the country have committed to paying (in present value) $1.7 trillion in retiree benefits beyond the ability of their tax bases to fund them. In California alone, the share of city budgets going to these costs has more than doubled in just the last eight years to 26 percent.” It’s long been my prediction that state and local governments will fix this mess the obvious way: by turning to the taxpayer through pension bonds or federal bailouts. Hey, everyone else is doing it!

Of course, no politician wants to talk about such debt and no politician at the state or national level wants to do anything more than give lip service to living within our means. Schwarzenegger, speaking to the League of California Cities in September, accurately bemoaned the big-spending Legislature: “You can imagine now Sacramento — that loves to spend money, money that is not theirs, they love to go to you [city governments] and to grab your money.” But in the very next paragraph, this big-spending governor talked about the importance of funding the bullet train and about “protecting” a pork-laden transportation measure. And then had no trouble, a couple weeks later, turning to the federal government to provide a little emergency funding.


Hey, it’s only taxpayer money! I’d suggest that those of us with any money left ought to take lessons from my time in Hanoi and start running away from these insatiable beggars.

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