The sorry state of California faces a $20+ billion deficit, and all the talk is whether the state falls into the category of too big to fail, and Washington should throw it a bone, or two billion. I think we know whose vote the state is not getting: Writing in the New York Times' Room for Debate, former presidential hopeful Ron Paul comes down firmly (and unsurprisingly) in the tough love category. As he puts it: "If you live beyond your means, you'll one day have to live beneath your means." Sage words, Mr. Paul. So what do we do, instead?
Instead of seeking federal aid, California should cut spending, rethink some of its unsustainable public pension programs, tame down the expensive and failed drug war, and repeal regulations that discourage economic growth. According to a 2008 piece by The Independent Institute's William Shughart, the state owns more than 20,000 buildings and 6.7 million acres of land, a portion of which is "surplus" property that could be sold to private owners.
It is worth unpacking this a little. What exactly does "cut spending" mean? For states, remember, it almost always starts with schools and social services. Indeed, in Gov. Arnold's plan to shave the deficit, he calls for $16.5 billion in spending cuts. Almost half of that -- $7.3 billion -- comes from three items: cutting K-12 school funding, cutting UC and CSU budgets, and cutting grants to the federal minimum for the poor, blind and disabled on supplemental income.
I'd like to offer a concurring opinion to Paul. I don't think we
should bail out California before we force it to change a broken
tax-and-spend system that is uniquely designed to make balanced budgets
forever impossible. But that doesn't mean we can't do anything for the
state. One idea that's caught my eye is to funnel stimulus money to the
state ahead of schedule to help the short-term holes in education and
social service spending. We would tell California that they weren't
getting any more money now than was originally earmarked for the state,
but they were going to get it faster. That way, California would have
the not-worst of both worlds: enough short-term cash to keep from
floating off into the Pacific, and the understanding that the
non-Californian taxpayer wasn't going to pay for mistakes of the
California taxpayer and the Sacramentans they elected.
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