Editorial: Rolling in money but still drowning in red ink
In a striking commentary on fiscal management, California’s budgetary woes serve as a cautionary tale for the nation, particularly for Democrats who often attribute the U.S. debt of $37 trillion to insufficient taxation rather than excessive spending. Despite boasting a recent revenue influx of $6 billion due to a booming artificial intelligence sector in Silicon Valley, California faces a staggering budget deficit projected to reach $35 billion by the fiscal year 2027-28. This paradox highlights the critical issue at hand: California, much like the federal government, is grappling with a significant spending problem rather than merely a revenue shortfall. State Senator Roger Niello emphasized the need for a thorough evaluation of the sustainability of programs established during previous surpluses, urging a shift in focus towards responsible fiscal management.
The blame game is rampant among California Democrats, who have pointed fingers at former President Donald Trump for exacerbating the state’s financial issues. They argue that federal policies have forced states to shoulder more healthcare and housing costs. However, this narrative overlooks the fact that California’s budget challenges predate Trump’s administration, stemming from a structural reliance on the wealthiest taxpayers and capital gains, which are inherently volatile and tied to the stock market’s performance. This dependency has not only failed to stabilize the budget but has also led to a series of temporary fixes rather than long-term solutions. As legislators grapple with the reality of their financial situation, proposals such as a wealth tax on billionaires have emerged, raising concerns that such measures could drive high earners out of the state, further diminishing economic growth.
Ultimately, the situation in California underscores a broader national dilemma: the need for a balanced approach to budgeting that prioritizes spending control over an endless pursuit of revenue. As Democrats in both Sacramento and Washington navigate these challenges, the imperative remains clear: without addressing spending habits, even the most prosperous states will struggle to maintain fiscal health. The call for fiscal sanity resonates louder than ever, urging policymakers to reconsider their strategies and prioritize sustainable financial practices that can foster long-term economic stability.
To hear many Democrats explain it, the nation has racked up $37 trillion in debt, not because Congress can’t control spending, but because the taxman doesn’t confiscate enough money from hard-working Americans, particularly those with comfortable incomes.
Perhaps they should take a look at the progressive nirvana we call California.
The Golden State should be swimming in revenue. In the past five months, Sacramento’s coffers raked in $6 billion more than projected, in large part thanks to the ongoing artificial-intelligence boom in Silicon Valley.
Yet the California budget is hemorrhaging. CalMatters reports that the state faces a deficit of $18 billion in the new fiscal year, and the red ink is projected to grow as high as $35 billion by fiscal 2027-28. All this because outlays are gobbling up the healthy revenue growth. In other words, California — like the federal government — has a spending problem.
“The state must assess the effectiveness and sustainability of the programs that were created during the surplus and make necessary corrections,” state Sen. Roger Niello, the GOP vice chair of the Senate Budget Committee, said in a statement, according to CalMatters.
State Democrats and Gov. Gavin Newsom blame President Donald Trump for their problems, of course. They cite efforts by the White House and congressional Republicans to force states to share more of the financial burden for health care and housing programs. They might have a case if California’s budget woes didn’t predate Trump’s second administration.
“Even before Trump retook office,” CalMatters reports, “California already faced a structural money problem, in part due to the state’s heavy reliance on wealthy earners’ income tax and capital gains, which rise and fall with the stock market.”
Translation: The California budget is already highly dependent on soaking the state’s wealthiest taxpayers, yet that has exacerbated the state’s problems rather than solved them. In fact, rather than control their spending addiction, Democrats in the state’s legislature have in recent years relied on various one-shot budget gimmicks to slap a Band-Aid on the oozing wound.
They were even forced to re-think plans to provide taxpayer-funded health care for those in the state illegally. The horror!
In the meantime, leftist special interests in California propose a version of the “wealth” tax on billionaires as a means of stabilizing the budget. If passed, it will be an utter failure, driving more productive citizens from the state and dragging down economic growth.
Rather than an endless obsession with more revenue, Democrats in Washington and Sacramento who believe in fiscal sanity — if there are any left — must focus on the other side of the equation.
Las Vegas Review-Journal/Tribune News Service
Editorial cartoon by Steve Kelley (Creators Syndicate)
