Golden State's Budget

California's Silent Big Spenders

Political class refuses to explain why the state requires hysterical spending growth

Matt Welch | May 28, 2009

Say this much for the French: At least they have the couilles to come right out and argue why government needs to be bigger and more intrusive. I may not agree that the state should enforce "solidarity," or protect people from the alleged ravages of "hyper-capitalism," or promote national values to an increasingly blasé world, but at least these are concrete articulations of a positive government agenda, one that is buttressed by France's semi-legendary (if slipping) public sector productivity.

You will hear no such arguments in California, even as a surly political/journalistic class continues its bitter campaign against "small government zealots" and voters who failed to heed their wisdom this month about the necessity of approving yet another round of budget gimmicks and tax hikes. Curiously, in the face of evidence that state spending growth has outpaced population-plus-inflation growth under each of the last three governors, the people busy sounding the alarm against "annihilating" budget cuts have fallen tellingly mute when it comes to explaining just why Californians should pay more and more money for government services every year.

What, exactly, has been the return on this added investment? If spending under Gov. Arnold Schwarzenegger increased 6.75 percent a year during mostly good times, surely there must be, say, a 3 percent increase in the quantity or quality of...something? Crickets.

Instead of making the positive case for big government, or at least beginning to explain, let alone defend, what Sacramento does with all that money, California's political class has instead opted for a four-pronged strategy: deny, scare, attack, then call for higher taxes.

First is the denial that there is a government-growth issue in the first place. This takes some intellectual dexterity, since the facts indicate otherwise.

Los Angeles Times business columnist Michael Hiltzik, for example, declared this week that the notion California had a spending problem was "an infectious myth." But Hiltzik was only able to arrive at that conclusion by not categorizing bond spending as "spending," and mis-measuring a 14 percent population increase over the past decade as 30 percent. An Los Angeles Times news article—with the objective headline "California budget crisis could bring lasting economic harm"—dismissed the big-government critique in two sentences: "Businesses have long complained about big-spending government in California. But with state and local spending accounting for about one-fifth of the state's gross domestic product, California is in line with some other heavily populated, expensive-to-manage states, such as New York and Florida." Left out of that comparison (besides a more representative opposition than "businesses" who "complained") was an even bigger state than New York or Florida: Texas, where state and local spending is not "in line" with California at all.

The scare story is the easiest to tell, and sell. It requires no falsifying, no comprehensive analysis of state spending, just selected horror stories and numbers about the miserables left behind by a suddenly crippled state. "Poor would bear brunt of California budget cuts," the Los Angeles Times headlined one story. Commented the California progressive Robert Scheer, in a disbelieving TruthDig column on federal reluctance to bail out the Golden State: "Bail out the banks, but not the 500,000 poor families with children served by the CalWorks program, which will be dismantled, or the 928,000 children covered by the Healthy Families program, slated for oblivion."

Next, and most fun, comes the attack, mostly against that vanishing and largely impotent California tribe known as "Republicans." New York Times economic columnist Paul Krugman called the state GOP "the party of Rush Limbaugh," with members who "have become ever more extreme," yet with "enough seats in the Legislature to block any responsible action in the face of the fiscal crisis." Washington Post labor columnist and longtime L.A. hand Harold Meyerson said that "today's GOP state legislators," when compared to the self-styled "Neanderthal" conservatives of the 1978 tax revolt, make "the Neanderthals look like Diderot's Encyclopedists."

How is it possible to blame a spending-based budget crisis on the spending-averse minority party in an increasingly monolithic Democratic state? This is where the reeling political class actually senses an opportunity.

"The biggest obstacle of all," wrote Los Angeles Times Sacramento columnist George Skelton just after the election, "is the inane two-thirds majority vote requirement for passage of virtually any money bill—spending or taxes." That two-thirds requirement, along with a cap on property-tax increases for owners who hold onto their homes and businesses, was part of the landmark 1978 voter initiative Proposition 13.

"The truth is that real solutions to the budget crisis are obvious," Hiltzik wrote just after the election. "One: Eliminate, or at least loosen substantially, the two-thirds legislative requirement to pass a budget or raise taxes. [...] Three is the Big One: Revise Proposition 13. Prop 13 is often described as a tax-cutting measure, but that scarcely does justice to the damage it has caused."

Also singing in the Prop. 13-must-go chorus were Krugman, Meyerson, UC Irvine Law School Dean Erwin Chemerinsky, the Los Angeles Times editorial board, The American Prospect's Tim Fernholz, and just about any newsroom employee you'll run into. To a man, they'll tell you that the initiative is responsible for "bringing the state to [its] knees in four decades," or in Meyerson's florid verbiage, for having "reduced the Golden State to baser metal."

But if that analysis is true, then there is a natural follow-up question that none seem to ask: Why is it that the quality of government services is going down when the prices are going up? Snap intuition suggests that taxpayer dollars are being spent less efficiently each year. The more you spend on waste, the less you can spend on those 928,000 children.

Though there are far fewer zero-sum contests in economics than most people think, the battle over taxpayer dollars is definitely one of them. Every Californian worried about service cuts should take a very close look at state-sector pension contributions and the sweetheart contracts negotiated by the public sector unions that aren't even apologetic about helping run the state's finances into the ground.

It's only a suspicion, but my guess is that the main reason pro-spending commenters and legislators don't regale us with defenses of the virtuous State is that in their hearts they know it isn't true. If Sacramento is providing boffo services, it isn't immediately evident in the places where non-welfare-recipient Californians are most likely to encounter them: On the clogged highways, in the crappy public schools, at the local DMV. If the stuff we don't normally see is being delivered with increasingly better results, that's the kind of story that might begin to persuade skeptical Californians. But that's precisely the story that the state's political class won't—or can't—tell.

Matt Welch is editor in chief of Reason.