California’s financial troubles with no hope in sight
Students are protesting possible tuition increases. The prison guards were contemplating recalling Governor Schwarzenegger over prison cuts. Nurses are protesting possible budget cuts. The California Teachers Association is lobbying for more money. The city of San Jose is looking for $14 billion. The city of Vallejo is bankrupt. Numerous other cities and counties are in financial trouble. The California state is estimated to be $28 billion in debt. Apparently 29 or 30 other states are also in trouble. The federal government cannot afford to bail us out. They simply do not have that much cash.
Here in California our elected officials realize we have a problem. They don’t seem to understand how severe the problem is. The Democrats are all for raising taxes. They are proposing 1.5 cent increase in sales tax and increasing the vehicle license fees (VLF) again. They should ask Gray Davis about the vehicle license fees. Even if these two very bad ideas pass into law they won’t come close to the $28 billion shortfall. If people aren’t making the payments on their cars why should they renew their license plates? If people are buying less the 1.5 cent sales tax will not generate more revenue.
The Democrats are blaming the Republicans for not supporting tax increases. The Republicans are holding out for cost cutting. Meanwhile both Democrat and Republican legislators are driving around in taxpayer provided luxury cars. They are also collecting per diem and other expenses not available to working people.
Porsche, Audi and VW are scaling back. Many businesses in the world are reducing production or shutting down. Porsche shutting down for a week will not affect most of us directly. However the ripple effect will reach us. Companies scaling back means fewer jobs not only at the factories but on down the line. Using Porsche as an example they will need less sales people, distributors, service personnel, less subcontractors, and less sales rooms. This applies to the “Big Three” automakers as well. We have all heard about the proposed $25 billion bailout.
The same applies to most businesses in the state and out. Mervyn’s and Circuit City are going under. Cisco is cutting back and many more companies are considering the same. Raising sales taxes is not going to stimulate these companies. Even the vehicle license fees (VLF) will increase their costs. Many of them have fleets of vehicles.
The state and local governments must cut back. Their wealth comes straight from our pocket books. They create no product; their only income is from taxes and fees. If we are giving them a bigger share of our money we buy less. If we buy less, producers produce less and need fewer employees. You can see where this is going.
The only way out of this mess is to stimulate business. Lowering taxes and reducing the size of government is the only way. Government programs and rebates will not work. Remember the Great Depression and the failed programs. WPA has become synonymous with boondoggle. The numerous other programs didn’t work either. They only prolonged the problem. World War II brought us out of the depression.
Many of our elected officials have worked for the government all of their lives. They have been immune to the whims of the economy. They do not understand the pressures of the market. They are surrounded by lobbyists and provided luxury cars at your expense. They travel on corporate jets provided by lobbyists and other special interest groups. The world that we live in is foreign to them. How can we expect them to understand our problems? They can’t. It is our job to inform them.