California – the big train(wreck) that could…go over a cliff.
Right now, the once-Golden State is on the precipice of an unimaginable economic disaster.
The state’s unemployment rate continues to run beyond 12 percent. Mortgage foreclosures are still climbing. Businesses – big and small – continue to leave for (tax) friendlier pastures. What’s more, the state’s unfunded liabilities (pensions/benefits/retirement plans) loom like gigantic, ship-killing icebergs on that foggy horizon that is the future.
As you read this, the state’s budget deficit is running somewhere in the neighborhood of $20 billion. The legislature should be making the tough decisions right now – not waiting until state law calls for a final budget no later than June. If the folks in Sacramento wait until then, it will be far too late.
The White House has thrown the state a bone – a bone that’s more than $1 billion large. Unfortunately (and you don’t have to be a Caltech math whiz to get this), that leaves a gap of…counting…counting…$19 billion.
Yes, it’s nice that the Feds recognize we’re hurting here in this Big Blue State – the one that went solidly for Democrats last election. According to the Los Angeles Times, of the “$25 billion in additional Medicaid funds for states, California is projected to receive $1.5 billion. States received a funding boost in the economic stimulus bill that Congress passed one year ago. [President Barack] Obama's budget plan would extend the funding through mid-2011. The proposal also includes $330 million to help states pay for jailing illegal immigrants. The money has long been a priority for California officials, who argue that local and state taxpayers should not have to bear the burden of Washington's failure to control America's borders. California's expected $90-million share would represent a fraction of the nearly $1 billion the state probably will spend this year on incarcerating illegal immigrants.”
So there you go. Not only will the money cover less than 10 percent of the state’s money gap, it also won’t make a big enough dent in the annual costs incurred by the state to pay for what should rightfully be a burden carried – or at least shared – by the Feds: the incarceration of illegal aliens convicted of crimes here in the United States.
California is running out of time. And whatever hope is out there for any kind of recovery is sure to be tempered by the realization that even bigger “challenges” lie ahead. For those Americans outside of California’s borders, this isn’t just the Golden State’s problem – it’s everyone’s. With a nation-leading economy that makes it among the 10 largest in the world, what happens in California impacts the rest of the nation…the rest of the world.
The old saying goes: “When California sneezes, the rest of the country catches a cold.” Well, California’s doing more than sneezing, folks…I hope you have a good health plan.