California - a great example how we can solve our economic problems now?

[hellheaven1987]

I found this when I was surfing BBC today.

Four years ago, the state of California was on the brink of bankruptcy.

It had been hit hard by the financial crisis. Unemployment was higher than the national average, as was the rate of mortgage repossessions.

Tax revenues were in steady decline, while expenditure had ballooned.

California's budget deficit stood at $11.2bn (£7bn) and in the state legislature Republicans and Democrats were at loggerheads over whether to cut services or raise taxes.

A budget was finally signed off by Governor Arnold Schwarzenegger three months late.

That included tough measures. State employees were asked to stay at home without pay for two days each month to reduce expenditure.

State offices were closed on the first and third Friday of each month.

But the situation did not improve. By the middle of 2009, the state government began issuing IOUs to meet its short term financial obligations. The rating agencies downgraded its bond-rating.

Yet four years on, California is projecting a budget surplus of more than $1bn for the 2014-2015 fiscal year.

Employment is rising faster than the national average and a report by the state's Legislative Analyst's Office said California had reached "a promising moment: the possible end of a decade of acute state budget challenges".

How did the state manage such a turnaround in its fortunes?

Firstly there have been swingeing cuts in state expenditure. Education has been hardest hit, with many lay-offs and a 30% rise in university fees.

State salaries have been cut and there have also been reductions in spending on healthcare and prisons.

Secondly, the political deadlock has been broken - Democrats now have a "supermajority" in the state, controlling the governorship and both houses of the state legislature.

Even so Governor Jerry Brown went directly to the electorate with a plan to achieve a balanced budget, something he has called a moral imperative.

Proposition 30 has been called the "Millionaires Tax" - except that in its final form it will affect everyone who earns more than $250,000 a year.

Four new tax brackets have been created for incomes above that threshold. Those who earn more than $1m will have to pay significantly more tax, backdated to the beginning of 2012.

Governor Brown's proposition was overwhelmingly approved on election night in November and combined with an increase in state sales tax, this is hoped to generate an extra $6bn in revenue.

Democratic California State Assembly member Bob Blumenfield, who chairs the Assembly Budget Committee told the BBC: "California clawed its way free from budget deficits through balancing tough cuts with new revenues and reforms that capture greater efficiency in government."

"After years of financial instability, we now have our best budget forecast in over 10 years. Every Californian can take great pride in this."

Source

What do you think? Do you believe California's method to solve its public debt by raising income tax, tax more on the riches and cutting government spending would work for some region such as EU now?

[Denny Crane!]

Already being tried in the UK with the problem being we are tied to a massive eurozone in constant state of collapse because of its currency and the fate of one being tied to all.

21 meetings to save the Euro, expect 21 more and the same level of stagnation.

[craziii]

problem with the eurozone, every single country is selfish. euro would never work if they don't start thinking of themselves as part of a single entity. too divisive to make any decisions, let alone important, significant ones.

california is huge, but still small when you compare it to europe or usa. reps in the usa would never accept the same tax rates for the country. they already tossed a tax plan offered by obama that had a higher cut off point at 400k. I hate to say it, but it seems like reps are just there to present road blocks to obama atm, not there to actually help govern the country. ing pitiful state of affairs. when I read about this theory I laughed at it, since the rejection of obama's latest offer, I am now 100% convinced this is the case.

[GrnEyedDvl]

What do you think? Do you believe California's method to solve its public debt by raising income tax, tax more on the riches and cutting government spending would work for some region such as EU now?

CAs problem is not solved, not by a long shot. Their "projected" budget is balanced, but the actual numbers coming in to not meet their projections.

http://www.reuters.com/article/2012/...8N797I20121207

Dec 7 (Reuters) - California's November revenue came in $806.8 million below projection in its budget, a disappointing development in light of signs that the most populous U.S. state's economy is on the mend, State Controller John Chiang's office said on Friday.

And businesses are leaving the state and a pretty good rate, to avoid the new taxes. Arizona is actually offering them incentives to go there.

california is huge, but still small when you compare it to europe or usa. reps in the usa would never accept the same tax rates for the country. they already tossed a tax plan offered by obama that had a higher cut off point at 400k. I hate to say it, but it seems like reps are just there to present road blocks to obama atm, not there to actually help govern the country. ing pitiful state of affairs. when I read about this theory I laughed at it, since the rejection of obama's latest offer, I am now 100% convinced this is the case.

I would have turned it down too. The principle of graduated tax rates is wrong in my opinion, and even if they raised the tax rates on everyone in the country making more than 250k to 100% we would still have a spending deficit.

Until he gets serious about spending cuts, he can piss off as far as I am concerned. We waste far more money in the current budget than he could ever collect from higher tax rate on the rich.

[craziii]

I would have turned it down too. The principle of graduated tax rates is wrong in my opinion, and even if they raised the tax rates on everyone in the country making more than 250k to 100% we would still have a spending deficit.

Until he gets serious about spending cuts, he can piss off as far as I am concerned. We waste far more money in the current budget than he could ever collect from higher tax rate on the rich.

then what do you propose? plz don give me the romney answer.

[GrnEyedDvl]

then what do you propose? plz don give me the romney answer.

Spoken like a true partisan. One who wont admit that the Dems or the Obama administration failed to pass 1 single budget in 4 years, which led to the increase in the lending cap every 6 months because of the "emergency". What is it with this class warfare thing?


I will give the answer that I think is best, that I know will work, and that fits within the framework of the Constitution as I see it.

Find fraud: There is 60 BILLION in Medicare fraud alone, and this idiot in the White House bragged about trimming 100 million dollars out of a 4 trillion dollar budget. Here is a good response to that btw. If you actually watch that video then make sure to read the comments, as they prove the point this guys is trying to make. One idiot says something about the video being crap because 100 million is 1/34th of 3.4 trillion, but he is off by a factor of 1000. 100 million is 1/34th of 3.4 billion.

Its just more proof that people do not get the scale of the federal budget, most especially people screaming for higher taxes on what amounts to 0.1% of the total population. It simply will not generate enough money, and he is stuck on this idea because it appeals to his need to punish people for being successful.

Some more numbers from his own propaganda on the official White House website. I call it propaganda since this has NOT been submitted to Congress as an actual budget. He puts some platitudes with broad overviews on a website, talks about it in the press, but never actually shows the line item budget and submits it to Congress and then goes running around the country saying that people are blocking his plan even though it wont work in the first place.

http://www.whitehouse.gov/omb/budget/Overview

On the matter of cuts, from a special PDF dedicated to cuts:

In each of his first two budgets,
the President put forward more than 120
terminations, reductions, and savings totaling

approximately $20 billion in each year.

This is a flat out lie, and anyone who actually thinks about it for 10 seconds knows it. We borrowed more than 1.3 TRILLION dollars in this years budget, and he is out there claiming 20 billion in savings?? I know its difficult but lets put that in perspective by actually using the 0s.


1 million = 1,000,000
1 billion = 1,000,000,000
1 trillion = 1,000,000,000,000


Federal budget last year, according to this spreadsheet:

Expenses = 3,603,000,000,000
Income = 2,303,000,000,000

Deficit = 1,300,000,000,000

His savings claim is 20 billion, a number which he pulled out of his ass after the 125 million comments he made all over the news got him nowhere. So even if we take him at his word that he saved 20 billion, it would still look like this.

1,300,000,000,000 deficit minus
20,000,000,000 savings
-------------------
1,280,000,000,000 deficit after savings


Talking to me about 20 billion dollars is pointless. This is like me giving you a raise of $5 a year and then running around telling you how much better off you are. And people all over the political left have bought into this because they simply do not ever do the math. This is not rocket science here, its a bunch of 0s tacked on to basic subtraction. You learned it in 3rd grade.

If you go to the Censue Bureau you can get a spreadsheet of every income bracket in the US and how many people are in it.

http://www.census.gov/hhes/www/income/

http://www.census.gov/hhes/www/incom...1/dtables.html

Click Detailed and then either Household or Family and it will open in Excel.


And then do some math, and you can even do it in your head. If you raised taxes to 100% on everyone making more than 250k, we still have a deficit. There is no simpler way to explain it, and you cannot get around the math. There simply arent that many people that make this much money, which is why they are an easy target but doesnt actually get us anyplace when we are talking about a 4 trillion dollar budget.


We HAVE to cut spending, its the only way.

[mrmouth]

You cannot mention California or Chicago in name and expect to not get lectured about the evils of our President, etc, etc.

YUT.

[OpieDJC]

then what do you propose? plz don give me the romney answer.

Reduce government expenditures and begin phasing out all of the failing government programs including entitlement programs.

Stop wasting money on foreign countries.

Stop wasting money on wars we have no business being in.

Deregulate the economy. Make it possible for businesses to produce again.

Eliminate fiat currency and dismante the Federal Reserve.

Eliminate all forms of corporate welfare, aka crony capitalism.

[sabaku_no_gaara]

And businesses are leaving the state and a pretty good rate, to avoid the new taxes. Arizona is actually offering them incentives to go there.

That is just plain wrong, you are all the same country, if your states are competing with eachother like that (offering incentives when tax rises), you will destroy yourself from within, your states will try to draw more power to themselves eventually and you'll end up in a situation like the EU is in today!

[OCWife]

That is just plain wrong, you are all the same country, if your states are competing with eachother like that (offering incentives when tax rises), you will destroy yourself from within, your states will try to draw more power to themselves eventually and you'll end up in a situation like the EU is in today!

Competition breeds excellence.

[King Gambrinus]

Competition breeds excellence.

This axiom is false. He mentioned the EU as an example. You know, that EU you keep criticising in America for "not being coherent enough".

Totally agree with sabaku.

[Denny Crane!]

That has nothing to do with the problems of the Euro at all. It is one strength currency across many different economies. Plain and simple.

[craziii]

then what is the problem with the euro atm?

[Odenat]

then what is the problem with the euro atm?

The problem with the Euro is that it's single currency for 27 different nations. All those nations want to live like Germans altough their income is much lower. No federal government means that the meetings and committees are deadlocked, decisions can not be made. All 27 country have different tax rates, different economic and social policies.

[Admiral Piett]

Texas is being flooded by a lot of mid-size businesses from the West Coast. I call BS.

[Aanker]

It is somehow ironic that the opening poster previously made either a thread or a post in a thread on Sarkozy's wealth tax, suggesting that were it to work it would be copied wide and far, in a tone that implied some animosity towards Merkel's austerity and evil capitalists. This is clearly a case where we can and should look at very recent history... In fact, history discussed quite vividly just a few days ago in this particular part of the forums.

California is trying the same old doomed-to-fail method of curbing excessive state spending, and unfortunately might - just like France - lose key investors that move elsewhere.

[Dalarna3]

This article talks about the state's budget, but it leaves out unemployment, welfare recipients, and overall G.D.P. growth. Hardly a "a great example how we can solve our economic problems now."

[hellheaven1987]

It did mention unemployed rate is going down in California now.

[Dalarna3]

It did mention unemployed rate is going down in California now.

But fails to mention numbers in the article.

[craziii]

read the following, yes, I do not use youtube or youtube comments to back me up. sorry bro, but you can't expect me not to take a jab at that :p
http://www.nytimes.com/2012/12/07/bu...pHD0fQ4qJwSPtQ
http://www.washingtonpost.com/blogs/...x-plan-add-up/
http://www.washingtonpost.com/blogs/...x-plan-add-up/

make sure you read this http://www.fiscalcommission.gov/site...h12_1_2010.pdf

do you understand now why I like obama's plan over romney's? forget politics for a moment and just read. obama is finally learning politics or maybe he stopped caring since this is his second term. trying to be bipartisan got him no where in his first term. that was pretty naive of him.

http://www.heritage.org/research/rep...obama-tax-plan this is a great anti obama tax plan article, and it's affects on the us economy as a whole. I can't vouch for it's accuracy but still an awesome read. I haven't come across any article of the same caliber for romney's or republicans' plan since there never was one with numbers, but just promises. if I am mistaken, please point me to one. if you can come up or find one that have near zero affect on the current economy and still lowers national debt, i am all eyes and ears.

come on, he inherited an ongoing, disastrous, nation building war in 2 countries from the previous administration and an economic crisis the moment he took office. deficit spending is 100% understandable and needed, or would you rather we go through another great depression?

cut spending right? show me a plan? when I asked you for a plan, instead of answering you gave me the above. come on bro, you are better than that. a golden rule to follow. if you don't have a plan of your own, don't criticize someone who does. if you think obama's plan is soooo bad, unfeasible and useless. than surely you and your fellow republicans can come out with one that is better instead of just attacking the one with a plan? it just shows how utterly inept you and the republicans are to guys like me who watches from the side lines.

show me a plan that is better than the simpson and bowles one.