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California Discovers There's No Free Lunch
by Alan Caruba
5 October 2003

The true meaning of the California recall is that it is a taxpayer's revolt against an elected leadership that, as in many other States, has totally abandoned any fiscal restraint or even common sense.


The true meaning of the California recall is that it is a taxpayer's revolt
against an elected leadership that, as in many other States, has totally
abandoned any fiscal restraint or even common sense.

In a recent issue of The American Enterprise, Kevin Hassett analyzed why
California, Connecticut, New Jersey, New York, Oregon, Massachusetts, Minnesota, Wisconsin, Maine and Delaware are mired in debt and the answer is Democrat control of their legislatures and governorships. Democrat control accounted for fully 70% of these and other State's deficits. In each of the top ten debtor States, tax revenues had increased 5% over the past decade, but spending grew even faster! Compare citizens in these debtor States whose average tax was $2,445 per person with those in States that are fiscally conservative. Their average tax was only $1,923 per person.

The bad news is that, under President George W. Bush, spending at the federal
level has increased on just about everything. "Three of the five biggest increases in federal spending in US history occurred during President Bush's first three years in office," notes Hassett. "This spending surge can't simply be written off to the war on terror." It is too soon to say if this will cost him re-election, but clearly Americans are fed up with this out-of-control spending and California is sending a message. Stop it! Stop it now!
Let's take a quick look at the situation regarding jobs and our national debt.

I keep hearing that all the jobs are disappearing. Some surely are. All new
technology replaces old technology. This happened to the agricultural sector
between 1850 and 1950. Today's version is not obsolescence; it is transference
as corporations elect to outsource often highly technical jobs to India, Russia
and elsewhere because it costs less. Another important factor is the way new
technology enables those who make things to do so faster, at less cost, and
with fewer workers.

There's another factor and it's the huge wave of Mexican immigration into
California and elsewhere in America. It has insured that crops get picked, lawns
get mowed, and hotel beds get made. This is an off-the-books economy that is
sending billions to Mexico. The constant flow of millions of immigrants, mostly
illegal, has insured that Americans will no longer do these jobs. Since this nation essentially stopped trying to count immigrants in the late 1950s, we have no idea how to find and induce these illegal aliens to become citizens. Why should they? They are a drain on the economy as they access medical care and our educational system, courtesy of taxpayers. Does any of this make sense? Ask a Californian.

The figures cited regarding disappearing jobs are based on the Establishment
Survey taken by the US Bureau of Labor, but it's just a poll of some 160,000
establishments and government agencies that tell the BLS how many are on their
payrolls. Never mind that the countless new, smaller establishments are left out or that some of these employees are moonlighting with second jobs. Then there's the Household Survey and this one says that job growth is soaring. It says that 1.8 million new jobs have been added to the economy since 2000, thus diverging by 2.6 million jobs from the other one that says we've lost jobs.

By comparing the two, you arrive at the statistical conclusion that job growth or loss is flat. As always, statistics, depending on who is announcing them on any given day, simply cannot be taken at face value. That said, it is surely good news to hear that 57,000 new jobs have been added to US payrolls since January. Today's unemployment of 6.1% is the same it was in 1994, 1987 and 1978. It does not portend a new Depression, given the annual economic growth of 4% or more.

And this may account for the fact that real people are spending real money on
consumer goods, the housing market remains strong, and even big ticket items
like automobiles are doing well. In a consumer economy, there will always be
good cycles and bad.

One thing, however, bodes ill. Our national debt is spinning out of control
despite or because of the budgetary hocus pocus being practiced by Congress,
the Treasury and other departments responsible for this nation's economic
stability and growth. The federal debt currently stands at $6.7 trillion. The
unfunded liabilities in the system exceed $44 trillion. The daily increase in the
national debt is $1.72 billion. You don't have to be a mathematician to figure
out that, sooner or later, something very bad is headed our way.

While ours is a consumer-driven economy as noted, we all also now live in a
virtual "welfare" society crafted by Democrats. The government takes our
earnings before they can be spent, invested or saved, then sends us a check when we get passed age 65. Through Medicare, the government controls the health care
system. Meanwhile, the Democrats continue to call for more taxes for the "rich", a term that now includes many two-salary middle class families, and the Census Bureau has just announced that the number of "poor" has increased as household income has declined. When you regulate every aspect of the economy, you increase costs. Is anyone surprised by this? You do not have to be an economist to know that most people are struggling to pay bills each month. Many carry large credit card debt.

When this nation was founded the intent was to insure a small federal government with most of the power delegated to the States. The founders did not conceive of an income tax, a central bank, a huge permanent government bureaucracy, or a Congress composed of professional politicians who routinely tap billions of public money to fund pet projects designed to get them reelected.

The voters are beginning to demand fiscal responsibility. Let's hope it is not too late.


Alan Caruba is the author of Warning Signs, published by Merril Press. His weekly commentaries are posted on the Internet site of The National Anxiety Center.

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