Tag Archives: Robert Samuelson

Department Of National Pundits Who Know Nothing About California, Aug. 3 Edition

We’ve already seen a trend of national columnists using California’s budget woes to conveniently push whatever obsession they want.  Two more of these land on the nation’s most august op-ed pages today, both of them inaccurate and out of touch with the nature of the situation here in the Golden State.

First we have fiscal scold Robert Samuelson trying to use California’s budget crisis to make a larger point about a national “fiscal reckoning.”  He claims that California has “made more promises than its economy can easily support,” as has the nation, and only fiscal austerity can remedy the problem.

On paper, the state could solve its budget problems by raising taxes further. But in practice, that might backfire by weakening the economy and tax base. California scores poorly in state ratings of business climate. In a CNBC survey, it ranked 32nd overall but last in “cost of business” and 49th in “business friendliness.” Information technology (Intel, Google, Hewlett Packard) and biotechnology remain strengths, but some traditional industries are struggling. High costs, as well as tax breaks from other states, have caused movie studios to shift production from Southern California. In 1996, feature films involved 14,500 production days in the Los Angeles area, says FilmL.A.; in 2008, the figure was half that.

So California is stretched between a precarious economy and a strong popular desire for government. The state’s wrenching experience suggests that, as a nation, we should begin to pare back government’s future commitments to avoid a similar fate. But California’s experience also suggests we’ll remain in denial, prisoners of wishful thinking, until the fateful reckoning arrives in the unimagined future.

Ezra Klein does a pretty good job with this column, noting it provides a lesson for the difference between fiscal responsibility and fiscal conservatism.  Samuelson, of course, is the latter, wanting a low-tax, low-spending country.  Rather than arguing for a balanced solution, Samuelson eschews taxes due to the “business climate,” even though many businesses cite the lack of investment in education and infrastructure that Samuelson is CALLING for as a reason for their concern about their future in the state.  In addition, the “businesses are leaving California” argument is a myth applied to all states by fiscal scolds as a means for them to race to the bottom and provide as many corporate tax breaks as possible.  Which California has done, to the tune of $2 billion a year, at a time when funding for state parks and domestic violence shelters and poison control units gets slashed.  Ezra adds:

Samuelson implies otherwise, but California isn’t a particularly high-taxing state. Total state and local taxes take up 11.73 percent of the average Californian’s income. The national average is 11.23 percent. And it’s been like that for many years […]

Nor is California’s spending on education somehow out of the ordinary. The state ranks 29th in the country on education spending (much lower per pupil; try 47th: ed.). And recent tax cuts haven’t been helping the Golden State out. This graph from the California Budget Project shows the contribution that decades of tax cuts have made to the state’s current fiscal crisis. It’s a pretty depressing story […] The budget deal that Arnold Schwarzenegger just accepted contained $15 billion in spending reductions. Absent the tax cuts of the last few decades, most of those reductions wouldn’t be needed (add the vehicle license fee increase and you’re talking about a surplus: ed.).

Samuelson is essentially making an argument about the kind of government he likes, using the California situation to illustrate it, the facts be damned.

Next up is Ross Douthat, who uses the California mess and contrasts it with Texas to create some notion of red states faring better in the recession, also at odds with the facts:

Consider Texas and California. In the Bush years, liberal polemicists turned the president’s home state – pious, lightly regulated, stingy with public services and mad for sprawl – into a symbol of everything that was barbaric about Republican America. Meanwhile, California, always liberalism’s favorite laboratory, was passing global-warming legislation, pouring billions into stem-cell research, and seemed to be negotiating its way toward universal health care.

But flash forward to the current recession, and suddenly Texas looks like a model citizen. The Lone Star kept growing well after the country had dipped into recession. Its unemployment rate and foreclosure rate are both well below the national average. It’s one of only six states that didn’t run budget deficits in 2009.

Meanwhile, California, long a paradise for regulators and public-sector unions, has become a fiscal disaster area.

Douthat also throws in the “rich businesses and rich people are fleeing California” canard, which as stated above is untrue about businesses and even less true about rich individuals.

Steve Benen deconstructs the argument about Texas being a great economic steward and California a basket case, and the reasons why.  As Benen says, Texas is the worst state in America for the uninsured and the second-worst state for poverty rates.  To conservatives who judge the progress of a state by the budgetary balance sheet and not the prosperity of the citizenry, I’m sure they are a model citizen.

Meanwhile, calling California a “liberal laboratory” and not recognizing the source of the crisis, namely the conservative veto on the budget process, speaks to Douthat’s complete ignorance about the nature of the state.  In addition, as Paul Krugman notes, there is no correlation between a state’s perceived ideology and their economic performance (two of the highest-unemployed states are South Carolina and Tennessee), nor is there any correlation between the level of taxation and the current unemployment rate.

I know that the dysfunction of what is seen on the national level as a blue state is an inviting target for conservative columnists to spin some wider tale about liberal failure and conservative ascendancy.  If only they had any knowledge of the actual facts involved.