The Californication of America

Ronald Reagan served as the 33rd governor of California for two terms, from 1967 to 1975.

Governor Reagan was a fiscal conservative. Here’s his first budget as governor of California.           

                               GENERAL FUND


                                            1966-67            1967-68                 Change

State Operations:     $1,057               $986                       -$71

Local Assistance:        $1,899             $1,994                    $95

Capital Outlay:            $43                   $7                          – $36

Totals:                         $2,999               $2,987                   -$12

The California Budget & Policy Center reported on Governor Gavin Newsom’s 2023-2024 budget stating,

Governor Gavin Newsom released his proposed 2023-24 California state budget on January 10, projecting a $22.5 billion shortfall that the administration would solve through a series of trigger cuts, delays or deferrals of spending authorized in earlier years, and withdrawals or reductions of planned one-time spending. The $223.6 billion spending plan would protect many ongoing investments made in prior years, but would not draw down state reserves, which are projected to total $35.6 billion.

Since Ronald Reagan was governor California has, under Democrat rule, created a budget shortfall that is 8 times the total size of Reagan’s first budget.

California Budget & Policy Center reports,

After two years of strong state revenue growth, the administration is now projecting that General Fund revenues for the three-year budget window ending with the 2023-24 fiscal year will be $29.5 billion lower than estimated in the 2022 Budget Act, before accounting for transfers into the state’s rainy day fund. This is notably lower than the Legislative Analyst’s Office’s previous estimate of a $41 billion revenue shortfall for the same period.

The downgraded revenue estimate largely reflects a major decline in the personal income tax revenue forecast, consistent with slowing economic growth and a weaker stock market — in part resulting from multiple actions by the Federal Reserve raising interest rates in an attempt to moderate inflation. However, the revenue forecast does not anticipate that the economy falls into a recession, in which case the administration estimates that revenue losses could be anywhere from $20 billion to $60 billion greater, depending on the severity of the recession.

The Californication of America

In 2012 Reuters reported on 10 States With Enormous Debt Problems. Reuters reported,

America’s 50 state governments owe $4.19 trillion, including outstanding bonds, unfunded pension commitments and budget gaps, according to a new report.

At $617.6 billion, California had by far the biggest total debt, more than twice the total of No. 2, New York, with $300.1 billion owed, according to State Budget Solutions, a research and non-partisan advocacy group.

Today, we additionally have our national government addicted to spending our hard earned tax dollars irresponsibly.

On June 3, 2023  on President Ronald Reagan’s OMB Director  wrote,

If there was ever any doubt, now we know: Speaker Kevin McCarthy has straw for brains and a Twizzlers stick for a backbone. He was within perhaps a few days of breaking the iron grip of America’s fiscal doomsday machine, yet inexplicably he turned tail and threw in the towel for a mess of fiscal pottage.

We are referring, of course, to the impending moment when the US Treasury would have been forced to forgo scheduled vendor or beneficiary distributions in order to preserve incoming cash for interest payments and other priorities. That act of spending deferrals and prioritization would have obliterated the debt “default” canard once and for all, paving the way for a nascent fiscal opposition to regain control of the nation’s wretched public finances.

And there should be no doubt that we were damn close to that crystalizing moment. After all, Grandma Yellen herself forewarned just last week on Meet The Press that absent a debt ceiling increase, the Treasury Department would have to prioritize payments and leave some bills unpaid:

“And my assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid,” Yellen said on NBC’s “Meet the Press…….“We have to pay interest and principle on outstanding debt. We also have obligations to seniors who count on Social Security, our military that expects pay, contractors who’ve provided services to the federal government, and some bills have to go unpaid….”

And, of course, that prioritization and deferral could have been easily done. Federal receipts are now running about $450 billion per month, meaning that after paying $61 billion of interest, $128 billion for Social Security, $26 billion for Veterans and $47 billion for military pay and O&M there would still be $188 billion left to cover at least 50% of everything else.

Read more.

Fiscal irresponsibility is not by accident. Today big government is the opiate of the people’s elected officials from the school house to the White House.

By passing Schumer, McConnel and McCarthy’s ‘Fiscal Irresponsibility Act’ of 2023 and Biden signing it into law according to  here’s his fiscal projections for the United States government, near and long term, by category:

Current 10-Year CBO Baseline for FY 2024-2033:

  • Revenues: $60 trillion;
  • Spending: $80 trillion;
  • New Debt: $20 trillion;
  • Mandatory Spending & Net Interest: $59 trillion;
  • Discretionary Spending for Defense & Veterans: $12 trillion;
  • Total Spending Exempted From Cuts in McCarthy Deal: $71 trillion;
  • % of Baseline Spending Exempted From Cuts: 89%

OMB Record of National Defense Outlays, FY 2017 to FY 2023 and McCarthy Deal Amount for FY 2024:

  • FY 2017: $599 billion;
  • FY 2018: $631 billion;
  • FY 2019: $686 billion;
  • FY 2020: $725 billion;
  • FY 2021: $754 billion;
  • FY 2022: $766 billion;
  • FY 2023: $815 billion;
  • FY 2024P: $909 billion.

10-Year Baseline Spending That The McCarthy Deal Leaves Unscathed:

  • Social Security: $18.8 trillion;
  • Medicare: $14.8 trillion;
  • Medicaid, Obamacare and Child Health: $8.0 trillion;
  • Veterans Disability and Comp: $3.0 trillion;
  • Earned Income Tax Credit and Child Credit: $0.9 trillion;
  • Aid to Aged, Blind and Disabled: $0.7 trillion;
  • Military retirement: $0.9 trillion;
  • Total Mandatories Unscathed: $47.1 trillion;
  • % of CBO Mandatories Baseline: 98%;

Non-defense Discretionary Outlays:

  • FY 2017: $610 billion;
  • FY 2018: $639 billion;
  • FY 2019: $661 billion;
  • FY 2020 $914 billion;
  • FY 2021 $895 billion;
  • FY 2022: $912 billion;
  • FY 2023: $936 billion;
  • 6-Year Increase: +53%

Numbers don’t lie. But politicians who are addicted to bigger and bigger government do.

 concludes his column thusly,

“[T]he ‘compromise deal’ is a hideous joke, and Kevin McCarthy truly does have sawdust for brains and a Twizzlers stick for a backbone. There is no other way to interpret the facts. In fact, just five months into his Speakership, McCarthy has already earned his place on the Wall of Shame right along side of Speaker John Boehner and Speaker Paul Ryan.”

Add to this list of those who have sawdust for brains and a Twizzler stick for a backbone Senators Chuck Schumer, Senator Mitch McConnell and Joseph Robinett Biden, Jr.

Florida Congressman Matt Gaetz in and email wrote,

On Wednesday night, the House of Representatives took one of the most consequential votes of the 118th Congress, passing the Fiscal Responsibility Act of 2023 and raising the national debt ceiling. Nothing about this piece of legislation is fiscally responsible. In reality, the Biden-McCarthy debt limit deal is a major win for the Democrat party, as it papers over America’s problems with unknowable sums of debt and gaslights reckless inflation-inducing spending. Americans are already suffering through Bidenflation, and this bill guarantees that it’s only going to get worse.

Last year, the American people gave Republicans the majority in the U.S House of Representatives because they wanted us to rein in the Democrat party’s out-of-control spending for woke and weaponized agencies. Yet Speaker McCarthy and President Biden chose to go behind the backs of hard-working Americans and negotiate a deal that cements the historically high COVID-era spending levels as the baseline for future spending. This bad deal adds $4 trillion to the debt in less than two years, funds 87,000 new IRS agents, and ensures Democrats don’t have to deal with the political fallout of raising the debt ceiling prior to the 2024 election. I can’t imagine a better deal for Democrats and a worse deal for our nation.

Even the purported policy “wins” are largely cosmetic budget gimmicks or waivable at Biden’s whims. It is disgraceful we have Establishment Republicans celebrating “work requirements” being traded for reforms that make the SNAP program more costly for taxpayers and more accessible to the homeless.

Only four Republicans remain in Congress who have never voted to raise the debt limit, and I’m proud to be among them. One of the principal mandates members of Congress have with their voters is to fight inflation. I refuse to be complicit in this bipartisan bankruptcy, and I will remain steadfast in my fight to put America First.

The Bottom Line

America has now become California when it comes to fiscal irresponsibility. From Reagan to Newsom and from Reagan to Biden we have seen government spending grown exponentially. Spending in California and now America are the new opiate of the people.

We agree with Bob Williams, president of State Budget Solutions, in that,

“Drastic reforms, innovations and political courage are needed to put our states [and federal government] back on the road to fiscal survival.”

We need more politicians who put America and Americans first by stopping any effort to raise the debt limit. Cut spending, don’t increase the debt needs to be the rallying cry of every American.

Time to “Make California and America Fiscally Sound Again!”

Time to drain the swamp from LA to DC of these spineless spendthrift wonders.

©2023. Dr. Rich Swier. All rights reserved.

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