California Gov. Arnold Schwarzenegger stands with a bust of President Abraham Lincoln. Sadly appropriate as the Republican governor oversees a Golden State gone bust.(Photo by The California Museum via Getty Images)
From the election of Ronald Reagan in 1966 through the next three decades, California has been the birthplace of all sorts of political and ideological trends: from Reagan conservatism to the property tax revolt, and the affirmative action backlash to immigration turmoil. Now, it could very well go bankrupt.
And ironically enough, it's another actor, Arnold Schwarzenegger -- far more successful in his cinematic career than Reagan was -- who is ushering the Golden State out of its Golden Age.
With legislators practically sequestered in the Sacramento Capitol trying to close a $42 billion budget gap, perhaps the most remarkable aspect of the story is that the state's portion of the stimulus package will barely make a dent in the state's fiscal misfortunes. California expects to get about $26 billion from the federal bill. Even assuming the state could use all of it to cover the current gap -- which it can't -- that would still leave a $16 billion hole.
By comparison, New York's budget gap for the coming fiscal year (which starts April 1) is $14 billion; it's share of the stimulus is $25 billion (and the state is already carving out creative ways to use the stimulus to help offset other planned budget cuts).
California, however, is stuck.
As the crisis drags on, the state is preparing to lay off as many as 20,000 workers today. Schwarzenegger, like Obama in Washington, is trying to convince stray Republicans in both Democrat-controlled chambers to agree to a $14 billion tax hike. That's a lot more difficult to do on the state-level than it is on the federal level given that state law requires a two-thirds vote in the Senate and Assembly to raise taxes. Republicans, chafing for years under the Democratic majority, aren't budging.
What's happened to the once-great state of California? Obviously, much of the problem is related to the overall national and international fiscal crisis, accelerating the state's role as the Ground Zero of the home foreclosure tsunami.
But California's problems have been growing separately for years. The state's rise in the '60s and '70s had been bipartisan. Reagan's Democratic predecessor Pat Brown had been a pro-economic growth Democrat. However, its decline has been equally bipartisan -- beginning with the government of Brown's son, Jerry -- who, like George W. Bush, succeeded the man who ended his father's political career. In a widely-read article social scientist Joel Kotkin wrote in November:
During [Jerry] Brown’s watch, and even despite his occasional opposition, the Democratic Party came increasingly under the sway of public employees, trial lawyers, and narrow interest activist groups. Their ability to raise money and impose their political will often outweighed that of even the most powerful business interests.
The full bill for this transformation would eventually be paid not by Brown, but by his former chief of staff, Gray Davis. Becoming governor in 1998, Davis became the prisoner of the special interest groups with whom his predecessors, Deukmejian and Wilson, had struggled.
By then, California’s shift to the Democrats had become inexorable and, with the fading of a GOP counterweight, influence within the party flowed to its more radical factions further to the political left. As a result, the state moved decisively away from the economic growth focus of Pat Brown. It seemed determined to wage war against its own economy. As pet social programs, entitlements, and state employee pensions soared, infrastructure spending—the hallmark of the Pat Brown regime and once 20 percent of the state budget—shrank to less than 3 percent.
The educational system, closely aligned with the Democrats in the legislature, accelerated its secular decline. Once full of highly skilled workers, California has become increasingly less so. For example, California ranks second in the percentage of its 65-year-olds holding an associate degree or higher and fifth in those with a bachelor’s degree. But when you look at the 25-to-34 age group, those rankings fade to 30th and 24th.
Instead of reversing these trends, the state legislature decided to spend its money on public employees and impose ever more regulatory burdens on business. Davis, a clever and experienced public servant, understood this but could not fight the zealots in his own party. When the state’s revenues shrank after the high-tech bust in 2000, he appeared to be their complete captive. Perhaps the most telling example of the misplaced priorities of the state’s majority party took place amid the state budget crisis when legislators, facing an imminent fiscal disaster, took time to debate legislation about providing more protections for transgender Californians.
Schwarzenegger came into office, defeating Davis in a 2003 recall, promising to use his personal charisma and force of will to compel the Legislature to make the dramatic changes that had to be done. Instead, "The Terminator" ended up being captured by the same forces as his predecessors. He is now only nominally a Republican. He generally has gone along with Democrats in recent years on increased spending and tax hikes. He is estranged from the GOP base -- thus explaining why he can't get one more solitary vote out of Republicans in the Senate.
And that creates a decades-long recipe for financial crisis that may reach 10 on the Richter scale. California is in a combination suspense and horror movie -- and its action hero governor doesn't seem to have the chops to rescue it this time.
Robert A. George is a New York writer and stand-up comic. He blogs at Ragged Thots.