We Can All Learn from California’s Budget Crisis

If the old saying about the rest of America following the Golden State’s lead is true, then the notion that California will run out of cash in mere weeks should frighten all Americans. In no uncertain terms, Governor Arnold Schwarzenegger remarked candidly at the state’s Capitol, “California’s day of reckoning is here.” People are so used to a politician’s double talk that when the brutal truth comes out, they know it must be bad. Really bad.

Although the “Governator” is currently proposing huge cuts to health care, prison and education programs and rapidly consolidating various departments and bureaucracies, is it too little too late? During the hectic election for Governor of California, he ran under the auspice of solving the budget crisis (that ended Gray Davis’s governorship) via spending and tax cuts, yet quickly felt the political pressure of California’s special interests, especially the powerful public-employee unions. The background of this story is well documented in reason.tv’s video, “Hasta la Vista, Arnold!”

Regardless, the fiscal consequences of the “high tax, high spending” approach that California has followed for decades are here, as well as the consequences at the voting booth. As you might already know, Schwarzenegger’s budget proposals suffered defeats in May 2009, as the public turned up to say no the spending and force the government to make the cuts. The Tax Day Tea Parties held across the nation on April 15, 2009 deserve credit for helping wake people up to the real causes of the economic hardships they face, and mobilized them into action at the polls.

Whether or not the current California crisis will be “solved” until the next catastrophe via a federal bailout remains to be seen, but the lesson that can be learned from their example should not be ignored.

Leave a Reply