My take on the Financial Crisis in California

California in Decline

by Andrew Hunt (The Waterloo Region Record)

July 25, 2009

California – once the mightiest state in the United States – is in the worst shape it has ever been since the Great Depression.

Throughout its history, California has been a symbol of the American dream. It’s where movies are made. Its beaches are breathtaking. The temperature hovers somewhere between warm and hot all year long. Suburbs sprawl outward for as far as the eye can see.

But the “Golden State” is in the midst of a terrible crisis, facing a $26.3 billion budget deficit for the 2009-2010 budget year.

Sacramento, the state capital, is a terrible place to be now. Morale has bottomed out in the legislature. Republicans and Democrats are blaming each other for the crisis. Vital programs are facing deep cu ts, with some even facing extinction. “Gov. Arnold Schwarzenegger gets a big knife and cuts California budget crisis,” cried a recent headline in the New York Daily News.

The movie star governor of California, once hailed as a fiscally responsible replacement for former Governor Gray Davis, is overseeing the greatest dismantling of social programs in the state’s history. The new budget negotiated between Schwarzenegger and key legislators will likely include $6 billion dollars in cuts to public education (K through 12) and $3 billion in cuts to higher education.

In the Los Angeles Unified School District, a $530 million shortfall has led to layoffs of 2,000 teachers. The state’s two main university systems – the University of California and California State University systems – face 20 per cent cuts. Tuition has skyrocketed. Student fees are exorbitant. Universities across the state have established furlough plans for faculty and staff.

It gets worse. The new budget will close at least 30 – and maybe up to 50 – of the state’s parks. This is an improvement over Schwarzenegger’s original plan to close all of the state’s 220 parks. But there will still be numerous park closures, a wor risome prospect for Californians.

Not surprisingly, the poor are suffering the worst under California’s budget-cutting orgy. Welfare, health and education programs are experiencing the deepest slashes. In California, there is a low-cost medical insurance program to help the working poor called Healthy Families. It could lose 40 per cent of its $1 billion budget.

Gov. Schwarzenegger hasn’t been very reassuring through this crisis. Sounding a lot like his movie persona Conan the Barbarian, the so-called “Governator” recently remarked, “Not that I have fun with making the cuts — they sadden me — but… that doesn’t mean that you cannot wave a knife around, or to wave your sword around, to get the message across that certain cuts have to be made because it’s budget time.”

Without question, the causes of the current crisis are complicated and numerous. California’s economic implosion has been years in the making.

Yet it is important to pinpoint some of the main culprits here. California has been the victim of excessive greed, too much deregulation, and too many policies that have enriched the wealthy while lowering the standard of living for the poor and middle class. California is unraveling due to too many irresponsible tax cuts and policies that have emphasized short-term financial gains for a tiny handful of the state’s most powerful citizens over prudent planning for the future.

These policies, largely the creation of Republicans (who enjoyed support from weak and vacillating Democrats in the legislature), have crippled California. They were in place long before Arnold Schwarzenegger led a recall campaign that booted ex-governor Gray Davis out of the governor’s office in 2003. And unless the state’s political establishment considers new directions and adopts different priorities, California’s future prospects appear grim.

Andrew Hunt is an associate professor of history at the University of Waterloo

Comments

[aion kinah]

It is important to pinpoint some of the main culprits here.

[Michelle Boudreau]

No matter how strong the economy is the crisis is common in across the globe , states like California are effected .