Friday, December 18, 2009

California Committing Economic Suicide

The state of California is bankrupt by any standard. The state has been borrowing money for years to fund not bridges or schools; but annual operating expenses. Since California's credit rating is so bad, it must pay significantly higher interest rates to borrow money. The Democrat Socialists that run the state along with the public employee unions have taken California from being the Golden state to being the bankrupt state. Of course, the Democrat Socialists that control the Congress and President Obama have provided California more bail out money in the most recent SwindleUS Plan; but it will only delay the inevitable, which is massive cuts in services and state government employees. This is inevitable because California already has the highest taxes in the country, which has driven many companies and thousands of jobs out of California. So while the Democrat Socialists are always prepared to raise taxes, it will do no good as more companies will just vote with their feet has has been happening for years.

In fact, many years ago, California had about 200 major companies with 5,000 or more employees headquartered in California. At last count that number is down to around 96. What is interesting is that California and Texas have completed reversed position in the last 25 years. Now it is Texas that has about 200 major companies with 5,000 employees or more when 25 years ago that number was about 80. Surprise, Surprise, Texas is a low tax, less regulation state while California is a high tax, high regulation state. The business climate in California is so bad that in 2008, California lost 47,000 employers. In fact, one of every 6 US employers that closed permanently in 2008 was in California according to the US Small Business Administration using bankruptcy court data. California had 45.1% more business deaths than births in 2008; hence the reason for the 12.3% official unemployment rate. The actual unemployment in California when all are counted is probably above 18%.

To make matters worse, California enacted Assembly Bill 32, which is the California Global Warming Bill, the California version of Obama's CAP & TAX. The Small Business Round Table estimates that this new law will cost consumers $149.2 Billion when it is fully implemented, small businesses $186.6 Billion and it will cost 1.1 Million jobs. When RINO (Republican in Name Only) Governor Schwarzenegger signed AB 32 in 2006, California had 4.8% unemployment. Now that unemployment is at 12. 3%, this law is the equivalent of the state of California committing economic suicide.

As California goes so goes the nation as governed by Democrat Socialists. President Obama and the Democrat Socialists that control Congress are doing to the nation, what Democrat Socialists have done to California. Ultimately, Obama's Trillions in deficit spending will bankrupt the United States. If this deficit spending does not stop and soon, we will have very high inflation as the debt is monetized. This will result in much higher interest rates. The dollar is already collapsing as investors seek the safety of gold. We have to take back our country in the elections of 2010 and 2012 by electing responsible Conservatives committed to proper fiscal management. We cannot allow President Obama and the Democrat Socialists that control Congress to do to the United States what has been done to California. If this was China, these politicians would be put in front of a firing squad for this kind of blatant fiscal mismanagement because it truly is a crime against the American people.

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