Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
H. L. Mencken
Californians turned down their governor’s attempt to right the wreck that is California’s state government:
SAN FRANCISCO (Reuters) – California Gov. Arnold Schwarzenegger and lawmakers will likely face the arduous task of closing a state budget gap in excess of $21 billion with a clutch of ballot measures aimed at bolstering the state’s finances poised for defeat.
The Republican governor last week said the government of the most populous U.S. state faced a shortfall of $15.4 billion for its next fiscal year even if the measures were approved — underscoring the severe downturn in state revenues with personal income in California shrinking for the first time since 1938 amid recession and double-digit unemployment.
Without voter approval for the measures, California would face a $21.3 billion deficit, according to Schwarzenegger, who with the state’s Democrat-led legislature put the measures to voters as part of a February budget compromise to close a nearly $42 billion shortfall through June 2010.
Initial results for Tuesday’s special election posted by California’s secretary of state showed voters soundly rejecting the five fiscal measures on the ballot. A sixth measure barring pay increases for state officials amid deficits was winning.
Some, like Michael Finnegan, writing in the LA Times are quick to blame the voters:
Californians are well known for periodic voter revolts, but on Tuesday they did more than just lash out at Gov. Arnold Schwarzenegger and the Legislature over the state’s fiscal debacle.
By rejecting five budget measures, Californians also brought into stark relief the fact that they, too, share blame for the political dysfunction that has brought California to the brink of insolvency.
Rightly or wrongly, voters in the special election refused either to extend new tax hikes or to cap state spending. They also declined to unlock funds that they had voted in better financial times to set aside for special purposes.
Many are blaming only the voters but IMO that’s a bum wrap. First and foremost in the list of those to blame should be California’s governor and state legislators. There’s more to leadership than doling out largesse. Neither Gov. Schwarzenegger nor California’s state legislators succeeded in making the case to the voters of California that the additional taxes were necessary. That’s their job. Deciding to spend money is easy. Paying is harder.
The idea California should receive a federal bailout is poppycock. When somebody is in the process of shooting themselves in the foot if we’re moved by pity to do something about it the proper approach is to take the gun away from them, not to let them fire away, then dress their wounds and shoot them full of morphine.
Megan McArdle points out that letting California go bankrupt will have consequences:
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. Your states and municipalities will pay higher interest on their bonds if California is allowed to default. Also, the default is going to result in a great deal of personal misery, more than a little of which is going to end up on the books of Federal unemployment insurance and other such programs.
Ultimately, not just Californians but all of us must learn to live within our means. One of the things that means is that when there aren’t the tax revenues to pay them government employees must not expect raises and, indeed, may even face pay cuts. I’ve read California’s budget (which is probably more than most Californians, even California legislators, have). The state’s expenses aren’t just growing faster than revenues, they’re growing faster than the streams on which the state’s revenues depend: income, real estate values, retail sales. They’re growing faster than the state’s population and faster than the rate of inflation. And most of those expenses are wages, current or deferred.