Article: California Dreamin'

The Golden State is going down the tubes. Perennial announcements that it was going to slide off into the Pacific one of these days were wrong. But California is destitute, and it is no one's fault but these selfsame Californians. I know. I lived among them for over a quarter century. I worked among them, and I voted against Prop 13. The root and branch of California's problems is revenue. There just is not enough income to support everything that Californians want at the same time, among them Corrections and Education. Highways and the rest are glued into untouchable niches that no one understands, but they do understand that Corrections has not corrected anyone noticeably, yet a fortune goes up in smoke everyday to keep "three-strikes" petty drug offenders behind bars interminably. This is not a plea for legalizing marijuana or any other home grown or brewed traffic hazard. It is just a fact that California has a Corrections albatross around its golden neck and needs to do something about it. The other element of the California budget that is accessible in ways that other departments are not is the world-class higher education system. The University of California, headed up by Cal Berkeley, the #1 public university in America, and nine other magnificent institutions like UCLA, San Diego, Davis, San Francisco Medical Center, Irvine and the others, costs a fortune to run. Then Californians provide themselves with top-notch 2nd tier education institutions, the California State Colleges and Universities system with twenty-three (23!) campuses serving half a million students and faculty. The budget for this is enormous. Then there is the California Community College System, the largest in the nation with 2.5 million students each year in one hundred and ten campuses! It is a huge investment by Californians in themselves, and the result is that California ranks as the 7th or 8th largest economy in the world! And it is broke. As the Obama Administration now rebuffs the plea of Governor Schwarzenegger to help support California during this crisis, the realization is finally dawning that the party is over. Prop 13 turns out to be exactly what it was advertised to be ... free money and a death wish. Prop 13 must be overturned and the property tax situation made more realistic and fair. Adjoining lots in Huntington Beach, CA, for instance, although the houses upon them would sell for about the same price today, may have thousands of dollars worth of difference in property tax, depending on whether they were sold pre- or post-13. The unfairness is palpable, but the solution scares the hell out of everyone with low property taxes, especially the legislature in Sacramento. Obama must hold to his principles and demand that California present an emergency initiative to repeal Prop 13 and to provide for a five-year transition to a sane property tax system. Such a demand will cost precious time when California has at best 50 days left before bankruptcy. Nevertheless, that has to be the opening move. California frankly is too big to fail. Its failure would set back the national attempt at recovery immeasurably, but California is also living in a dream world, if Californians think that the rest of us are going to support their dream when the nation is great economic peril. The national peril is the result of California Dreamin' across the land. We are like Wiley Coyote in the roadrunner cartoons, propelled by our eager greed right out and over the cliff. Obama and Co. are trying desperately to keep us from looking down and noticing that there is no ground under us. Europe, on the other hand, with its three thousand miles of detachment and love-hate relationship with Hollywood and the dream machine can see perfectly well that the U.S. is without visible means of support. In fact, Europe is implementing corrective action while the U.S. administration is still performing triage over the carnage on Wall Street. (More about this in a moment.) And at this moment the BRIC nations, Brazil, Russia, India, and China are meeting to try to get their egos salved on the issue of currency and finance control. One too many shots of vodka at this meeting could prove to be ruinous to world cooperation! The domestic critics of Obama's fiscal and economic policies on the right and the left are missing the point. The situation we are in is fraught with terrible complexity and, as I wrote last week, the ship of state has to be stopped from sinking before it can aggressively take a new and safer course. Yes, of course, it would be nice to take course-corrective actions now, but you cannot steer the ship when three out of four engines are out of commission. It is fatuous, indeed, for the pundits to keep up the pelting of whining and tantrums while the White House is struggling with more basic concerns. Among those concerns are the relative position of the United States in the world economy. The amazing fact is that while flat on our face, the U.S. economy is the strongest of anywhere, but ... the competition is getting greater and the egos of countries like Russia and China will not be comforted just to hear that the U.S. will be back leading the world into the millennium. There is some advantage to being very big and having to perform more triage than the rest. There is some advantage to being slightly tardy in reform. We have the opportunity to see what the rest are considering, what problems they have politically with their ideas, and how global corporations react to the European reforms. But beyond and behind these advantages are the galling realization that the juggernaut that crashed here first still has addicts, and these addicts still have political power here. Coming in slightly behind the others provides Obama and his administration with political leverage from abroad with which to maneuver the greed-mechanics. They can use the faits accompli of European and other reform measures to gauge and to prod the Congress. This is not to say that Europe is going it alone, by the way. Nothing happens in the EU or in its constituent countries without some deference to U.S. interests. Actions taken may not come out exactly as Obama and Summers and Geithner hope, but the directions are there to be used politically in our often dream-ridden domestic politics. JB