Wednesday, May 20, 2009

Next Bailout? Picking Up The Tab for California

So what about California?…tough one…California is completely, totally, irreparably hosed…Their outflow is bigger than their inflow. You can blame Republicans who won't pass a budget, or Democrats who spend every single cent of tax money that comes in during the booms, borrow some more, and then act all surprised when revenues, in a totally unprecedented, inexplicable, and unforeseaable chain of events, fall during a recession… Whoever is to blame, the state was bound to go broke one day, and hey, today's that day!…There is a surprisingly sizeable blogger contingent arguing that we have to bail them out…But actually, we do have a choice: we could let them go bankrupt. And we probably should…I am not under the illusion that this will be fun. For starters, the rest of you sitting smugly out there in your snug homes, preparing to enjoy the spectacle, should prepare to enjoy the higher taxes you're going to pay as a result…Is California Too Big to Fail? Meghan McCardle, The Atlantic, 5/19/2009

The subject of the Atlantic’s McCardle’s article should make New Yorkers very, very uncomfortable. In the Big Apple, which has a lot of worms in it nowadays, as tax revenues plunged during the banking, real estate and stock market disaster of 2008, the hapless Governor Paterson presided over a wildly irresponsible Legislature that not only “closed” the budget deficit with the “Stimulus” but raised spending in the 2009 budget 12.7% over 2008. For those not New Yorkers, that means that expenditures increased by well over fifteen billion dollars. The answers arrived at were twofold: take the “Stimulus” money and put it in place of tax revenues that no longer exist; and raise taxes on lots of consumer products and state services like automobile registration. Those aware of their tax bills know that taxes on products and services directly and adversely impact those lowest on the totem pole, i.e., those of us who go to work in the morning rather than telling other people while they sit behind their vast, oaken desks in the State House or the Governor’s Mansion.

Governor Schwarzenegger took the right first step, declaring within hours that statewide employment and service cuts would begin right now. That’s the sensible and the responsible thing to do. When you don’t have the money to meet a budget, you cut spending first. Not in New York, and not apparently, from the wishes of many mouthpieces for the Left, in California. No, no, we’ll take more money from those daring to be successful, those who hire the rest of us, those whose donations keep orchestras, business improvement districts, hospitals, and a thousand other varieties of nonprofit providers of services running, not to mention tens of millions of people employed.

Tom Galisano, a multibillionaire who lived in New York and ran for Governor a while back, announced in yesterday’s NY Post that, as a consequence of tax increases from NY this year, he had moved himself and his business to Florida. That’s five million that he was willing to pay in personal and business taxes to NY, and a thousand or so jobs. The White House’s favorite whipping boy, Rush Limbaugh, who contributed millions of his discretionary income to keeping up restaurants, charities, and the Philharmonic, moved out a month ago. Taxpayer flight at that level directly attacks the primary sources of NY’s revenues, those five percent who pay more than fifty percent of state and local taxes. And, they're not the only ones who are leaving. As common are those who cross the border to live in Vermont while they work in New York.

But who cares? The Change Feds will probably make tax haven states meaningless by usurping 10th amendment powers from the states, and imposing the same, ruinous tax schedules on the entire country, as they have just done with a national CAFÉ standard for automobiles, and plan to do further with such looting schemes as cap-and-trade. They will “bail out” California, guaranteeing that no state legislature in the country will take the responsible route of matching revenues with expenditures. They will “bail out” New York, despite what is obvious to anyone, that the more the government controls, the more business and the general economy slides into stagflation and bankruptcy. They will “bail out” a medical system that might return to health if an actual marketplace for its services were allowed the freedom to separate the chaff from the wheat. That’s what markets do. But that isn't being allowed. It's too rational, too sane, too cold. Better that everybody should go bankrupt that allow the market to punish a few incompetents with business failure. Why?

You have to understand about Socialists, as they seize more and more, just like the Socialists are seizing everything in Venezuela. They don’t care if they ruin the country – our country. They don’t care if everyone ends up living in unpainted, disintegrating houses driving cars that can barely get past the city limits without breaking down -- a universal Havana. They don’t care if our enemies triumph, not least because our enemies are not theirs. They don’t care if we freeze to death in “green” houses. All that matters to the Socialists is the Experiment, to finally “get it right” after failing in every country where Marx’s apostles’ creed has been sworn to. Everyone who disagrees with Socialists is the Enemy. You are their Enemy. Their constituents expect you to bow down to them, to surrender everything you care about, and everything you own. Wake up!


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