The 'Golden State' Still Doesn't Get It
States: The midterm elections turned into a sweeping repudiation of the Democrats' failed status quo - except, that is, in California. There, not only did the Democrats not lose, they gained clout.
Even as voters in other states said they'd had enough of ever bigger, more intrusive and higher-cost government by the Democrats, California voters said, "More please."
With the exception of the governor's office, California has been a virtual one-party state since the 1960s. Now, thanks to decades of anti-business policies promulgated by a series of left-leaning legislatures, its economy and finances are a mess, and it's hemorrhaging jobs, businesses and productive entrepreneurs to other states.
The pattern continued on Tuesday, when voters rehired 1970s Democratic gubernatorial retread Jerry Brown and rejected moderate Republican and former Hewlett-Packard CEO Carly Fiorina for far-left, five-term incumbent Sen. Barbara Boxer.
How bad has it gotten in the erstwhile Golden State? Consider:
• Some 2.3 million Californians are without jobs, for a 12.4% unemployment rate - one of the highest in the country.
• From 2001 to 2010, factory jobs plummeted from 1.87 million to 1.23 million - a loss of 34% of the state's industrial base. Ask any company, and it'll tell you the same thing: It's now almost impossible to build a big factory in California.
• With just 12% of the U.S. population, California has almost a third of the nation's welfare recipients. Some joke the state motto should be changed from "The Golden State" to "The Welfare State." Meanwhile, 15.3% of all Californians live in poverty.
• The state budget gap for 2009-10 was $45.5 billion, or 53% of total state spending - the largest in any state's history.
• The state's sales tax is the nation's highest, and its income tax the third-highest, the BusinessInsider.com Web site recently noted. Meanwhile, the Tax Foundation's "State Business Tax Climate Index" ranks California 48th.
• In a ranking by corporate relocation expert Ronald Pollina of the 50 states based on 31 factors for job creation, California finished dead last.
• In another ranking, this one by the Beacon Hill Institute on state competitiveness, California came in 32nd - down seven spots in just one year.
• California is home to 25% of America's 12 million to 20 million illegal immigrants. A 2004 study estimated that illegals cost the state's citizens $10.5 billion a year - roughly $1,200 per family.
• Unfunded pension liabilities for California's state and public employees may be as much as $500 billion - roughly 17% of the nation's total $3 trillion at the state and local level.
This has been building for decades. Yet, despite the abysmal track record, Democrats in this election not only won six of the state's seven top jobs, they extended their hold over the state legislature, too. The GOP gained a record 680 seats in statehouses nationwide on Tuesday. In California, they gained none.
Even Democratic candidate Jenny Oropeza, who died two weeks ago, still managed to defeat live Republican John Stammreich in a race for a state Senate seat.
California really bucked the national trend.
"Democrats had a 13-point party identification advantage among California voters, compared with an even split nationwide," wrote Jack Pitney, a professor at Claremont McKenna College, on the National Review's blog. "California voters approved of President Obama's performance by a 10-point margin, whereas the national electorate disapproved by nine points.
"It's a different kind of state," he said. That may be the understatement of 2010.
A large part of the state's Democratic tilt comes from its massive Latino population. The Los Angeles Times noted that it made up 22% of the voting pool, "a record tally that mortally wounded many Republicans."
Indeed, Latinos went for Democrats by 2-to-1 - perhaps ending the naive idea of some in the GOP of a New Majority built on the burgeoning Latino population.
But the real political problem lies in Sacramento, the state capital, which is run not so much by politicians as by the unions they've sold out to - state employees, nurses, teachers and prison guards.
For their part, politicians have largely ignored the state's crumbling infrastructure, failing schools and dismal job market. And it's about to get worse.
Voters also approved a new measure requiring a simple legislative majority to approve a state budget. It previously took two-thirds, giving Republicans far more leverage. Democrats, in other words, will now find it even easier to spend money they don't have.
Moreover, as its tax base shrivels, the state is lurching ever closer to fiscal insolvency. At some point, it will ask Congress for a bailout, and how likely is that with the new Republican majority?
Worse is the feeling among the state's businesses of an entrenched, almost pathological antipathy toward any job-creating activity.
As Cypress Semiconductor CEO T.J. Rodgers memorably put it: "The killer factor in California for a manufacturer to create, say, 1,000 blue-collar jobs is a hostile government that doesn't want you there and demonstrates it in thousands of ways."
So far this year, thanks to California's unfriendly political environment, strict regulations and high taxes, 32 companies have announced they'll either expand elsewhere, move or shut down operations, according to the California Manufacturers & Technology Association.
For many, it's as simple as ABC - Anywhere But California. This is an issue near and dear to our hearts. Investor's Business Daily was founded in 1983 in Los Angeles - and for a quarter of a century has proudly called California its home.
But we too have been affected by the state's poisonous, anti-business political environment. With de facto one-party rule in the state since the 1960s and few signs of change anytime soon, our optimism about the state's future has begun to wane.
As a result, sad to say, much of IBD's future growth will happen at a new facility in Texas - where local and state authorities have bent over backwards to make us feel welcome.
California was once like Texas, but lost its way. Today, when comparisons are made, California is most often compared to Greece - another idyllic place with a sunny, Mediterranean climate on the verge of bankruptcy.
In the end, only the voters of California can change things. But on Tuesday, they opted for more of the same governance that will only make conditions worse.