22 of the last 23 years California sent more to the other 49 than they got. Is it any surprise that running a deficit for a generation becomes a problem? Tell ya what. Zero out the accumulated funding imbalance, call it even and let us go our own way. What? The other 49 cannot afford to write a check that large? Fine, then we are all in this together. Sit down, shut up, hang on and get ready to write a check.Barry and Timmy are getting ready to do just that. California politicians know this, which is why they are refusing to make the necessary hard choices. This leads to a moral hazard: Why should other states keep their financial houses in order when they know Uncle Sam is ready to bail them out? It seems rather selfish of California politicians to demand that people working low-wage jobs in places like Maine and Georgia pay more to make sure that California state workers continue to receive their very generous pension benefits.
Getting to Rob's first sentence, this was a frequent refrain from Californians during the boom times. Many Californians groused that they were paying more into the federal treasury than they were getting back. So let's peel back the layers a bit and analyze this. Here are some facts:
- California residents pay the very same federal tax rate as those of us in the other 49 states.
- Well, not quite. Middle Americans don't get the fat subsidies that Californians get for "owning" a house. The fact is, the rest of us are subsidizing California home owners to the tune of billions of dollars every year.
- California incomes tend to be inflated by a series of manias (1) (2) that originate there and then go on to wreak havoc on other parts of the country. Like New York, fat corporate profits originating from these manias are responsible for a large chunk of the federal revenue.
Next time you read comments from Californians about how they're the "8th largest economy," "the other 49 states can't survive without us," "we should secede and become our own country," (blah blah blah) keep in mind that the rest of us have been subsidizing their illogical behavior for decades. For the good of the country perhaps it's time that we set California free to pursue its own destiny.
Update: Howdy, Chronicle readers!