What's the Matter with California?

The Laboratories of Statism

by Robert Tracinski

The most baffling aspect of last week's election "wave" is the fact that a few areas of the country remained untouched by it. When Scott Brown was elected in Massachusetts early this year, there was reason to believe that even some of the deep "blue" states might succumb to a turn to the right. But in November, they didn't.

In California, voters kept Barabara Boxer in her Senate seat, but more tellingly, they voted to put Jerry Brown—the washed-up old hippie known as Governor Moonbeam from his previous term in office—back into the governor's mansion. In Massachusetts, only ten months after Scott Brown, Republicans didn't pick up a single House seat, and Obama clone Deval Patrick was re-elected as governor. And while Illinois voted to put a squishy moderate Republican into Barack Obama's Senate seat and added a few GOP House seats "downstate"—i.e., outside of Chicago—they also voted for a Democratic governor who promised to raise their taxes to fill the gaping maw of the state's public employee pensions. New York also put off any day of reckoning with its budget problems.

On the national level, this is more of an annoyance: it cost Republicans their shot at a bare majority in the Senate, but it's not clear how much the Republicans could have accomplished with those extra Senate votes, anyway. The real damage will be caused in the states themselves, because each of the holdout states is being destroyed by exactly the policies its voters chose to keep on supporting.

A number of years ago, a leftist wrote a book titled What's the Matter with Kansas?, which asked why those rubes in flyover country keep voting for conservatives when it's against their economic interests. Well, the unemployment rate in Kansas is 6.6%. The unemployment rate in California? About 12.5%. Maybe we should be asking, "What the matter with California?"

In addition to voting for Governor Moonbeam, California voters rejected a referendum that would have suspended the state's economy-killing mini version of cap-and-trade until the state's unemployment rate falls below 5.5%. Asked to make a choice between prosperity and environmentalist dogma, Californians chose environmentalism—by a two-to-one margin. Oil refiners—necessary to California's famous car culture—will be the first to be hit hard in a state that already suffers from a fragile energy infrastructure, undercut by decades of attacks on both conventional and nuclear power plants. Back in the 1970s, Jerry Brown governed under the slogan "Small Is Beautiful." By that standard, California's economy is looking more "beautiful" every day.

But California's government is not beautiful at all. Bloated payrolls and pension obligations have pushed the state into massive deficits and an ongoing fiscal crisis. And California is not alone. New York also faces the same problem, and so does Illinois. In fact, Illinois recently surpassed California as the state with the nation's worst credit rating.

Jack Wakeland—who has the misfortune of still being a resident of that state—recently sent me an update on "what life is like in one of the states untouched by the GOP wave."

"Acting Governor Pat Quinn ran on a platform of raising the state income tax from 3% to 4%, and he stated this was necessary in order to increase 'education' spending. His opponent, downstate pro-gunner and Christian Bill Brady, vowed to impose 10% across-the-board spending cuts. Who won? Pat Quinn. He won by 19,400 votes, according to the latest count (0.6% of the 3.3 million votes cast).

"One could easily put that margin off to voter fraud, but how could the vote have even been close? The answer can be found in the fact that there are a lot a pro-tax slugs crawling around in Illinois. In a year that saw spontaneous anti-spending protests by Tea Party rallies across the county, Illinois hosted what had to be the only pro-tax rally. A group of over 10,000 state and local government employees were bused into Springfield by their unions so that their voices—bought and paid for by my tax dollars—could be heard.

"Although the union buses were an Astroturf aspect to the event, the protest against liberty was real enough.

"Illinois is now the most insolvent state in the Union. A report from the state comptroller four weeks before the election outlined the extent to which Illinois is actually insolvent—the state has not been paying its bills for two years.

[M]ore than $6.4 billion in FY 2011 revenue will be used to pay last year's bills. The Comptroller's Quarterly said even though Quinn borrowed $1.3 billion in July to help catch up on obligations, there are vendors and providers still awaiting payment from invoices submitted last March. In September the backlog was $5.5 billion.

"The first act of the Democrat-controlled state Senate after the election? They met in Springfield to see if they'd vote to implement a new $4.1 billion bond issue. What is the state 'investing' in at a time like this? The 'investment' is keeping up with current payments to retired state employees.

"With the spotlight on their special session, the Democrats decided to duck the issue, punting it into next year's regular legislative session. But the Democrats' priorities are clear. They will borrow money to assure the smooth continuation of payments to retired not-for-profit government 'workers,' but they won't pay the bills long overdue—many payments are more than 12 months overdue—for services provided by for-profit state contractors."

The lesson is that some people are so deeply ideologically committed to statism—or corrupted by it—that they will not turn back from the precipice even as they are falling off of it.

By contrast, the Republican wave in state-level elections last week has put Republicans in a position to control the legislative agenda in at least 20 states, and we're already beginning to get a sense of how they're going to use that power. I've already linked to an article about plans to cut state budgets.

"We're going to do what families and businesses all over this country have already had to do, and that is live within their means," said Brian Bosma, a Republican who will soon become the speaker of the Indiana House, alongside a Republican governor, Mitch Daniels, and a supermajority of Republicans in the State Senate.

Texas is considering dropping out of federal health-care programs like Medicaid and the Children's Health Insurance Program. A number of states are also moving to cut pension payments for public employees by moving to 401(k)-style "defined contribution" plans. The idea is that state governments can control what they are required to pay into employees' retirement funds while they are actually working, after which the employees rely on their own investments—rather than the state being on the hook for providing its retired employees with a generous guaranteed income for life.

As Jack pointed out to me, we're going to see in the next few years a series of side-by-side laboratories, pairs of "neighboring states or economically similar states that can be compared, like East Berlin and West Berlin." He suggests Illinois vs. Indiana, Maryland vs. New Jersey, California vs. Texas, and New York v. Pennsylvania. "There are 20 state pairings that will be laboratories of the real world, in which the differences between a bloated welfare state and more limited government will be showcased."

I have noted that the political battle is just beginning, that last week's election is not a triumph for Republicans but rather a second chance, an opportunity to show the American people that they can adopt better policies and achieve better results. This battle won't all be fought on the federal level. In fact, the most important battles may be on state level. In Congress, the Republican majority in the House will be stuck in a permanent stalemate, trying to score symbolic victories while figuring out how far they dare to push a showdown over the budget. But on the state level, Republicans will wield actual power and have the ability to choose and implement their policies. That is where they really have an opportunity to balance the damn budgets and demonstrate the virtues of small government. In doing so, they will also put forward a whole new crop of political heroes—and potential presidential candidates—who will be in a position to claim credit for these achievements and earn an even broader electoral victory in 2012.

How long can the commitment of America's statist enclaves persist, in the face of continued evidence that their policies are destroying them—while opposite policies are producing opposite results elsewhere?

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