Sunday, February 19, 2017

California Budget

California's secession movement likes to point out that California is the sixth largest economy in the US, and that they are a net producer of funds. Let's take a look at that, shall we? This post will include a lot of numbers.

According to Ballotpedia, California collects a total of $138 billion in state and local taxes, while receiving about $55 billion in direct compensation from the Federal government. That is a total of $193 billion in government revenue. In FY 2015, it spent a total of $252.5 billion, leaving a deficit of about $60 billion. When Federal grants are considered together with ALL Federal spending, California receives more Federal money than any other state: a total of $343 billion in FY 2012.

Pew divides this spending into five categories:
Retirement Benefits. Just under one third, or $102 billion, was devoted to retirement benefits, including Social Security payments and veterans benefits.
Nonretirement Benefits. Less than one third, or $99 billion, was spent on nonretirement benefits, like Medicare, food assistance, and unemployment insurance.
Grants. About one fifth, or $67 billion, was devoted to grants, which includes those for Medicaid and other health care programs, transportation, education, and housing. (To capture federal funding for grants to states, Pew used—a site devoted to federal spending transparency. The site has well-known problems with data quality, and some of these issues may have affected Pew’s results.)
Contracts. About one seventh, or $48 billion, included money for contracts for the purchases of goods and services, like military and medical equipment.
Salaries and Wages. Finally, less than one tenth, or $29 billion, was spent on salaries and wages for federal employees, including military personnel. (Pew measured salaries and wages using sources that report salaries and wages by place of employment, rather than residency, which could distort this measure.)
All of that spending would need to be replaced. Some of it because it is needed, some because the voters of the state would demand it. California would have to pay for things that the Federal government currently pays for, but isn't included in the above numbers: National Defense, which according to this article, the supporters of CalExit think that they won't need, because they are going to be neutral, like Switzerland. If this were the case, I would imagine that the new nation of California would become either part of Mexico or part of China within a decade.

Replacing all Federal spending would mean that the proposed nation of California would not only need to build some sort of military, but would need to replace the roughly $8900 a year per capita that the Federal government currently spends there. Annually, California currently collects $138 billion in taxes, while the Federal government collects $405.8 billion from the state. This means that there would be a deficit of about $53 billion, which would require a tax increase of about $1,400 per capita, or about  $5600 on average for a family of four. This number represents about 10% of California's mean family wage.

Additionally, California will have to work deals to replace goods and services that they do not currently produce themselves. For example, it may be true that the northern part of the state provides much of the water that the state needs, the southern half of the state gets a large portion of its water from outside of the state, and that would need to be replaced, probably with a new pipeline that would need to be built and paid for.

All of this ignores the political aspect. The northern part of the state largely detests the liberal elites who live in the coastal and southern regions. How will they keep those parts of the state from breaking off and remaining in the US?

None of this concerns the Calexit folks, who say:

Yes California doesn’t have any policy positions. Its members don’t know how the new nation’s government would be set up. The group’s goal is to first have the state secede and then figure out how it should run.
“People are asking about the new nation’s vaccine policy, and I’m asking, ‘Are you high?’  ” said Karen Sherman, who holds group meetings at the gay dive bar she owns in San Diego. “We want to explore independence, not create a new country around vaccines.”
Secede first, and then decide how to run the country? Is that anything like passing a law to see what's in it? Like petulant children, they are angry that the election didn't go their way and want out, but they have no idea how to run things, no plan, and are doomed to fail. Like the Confederacy, they are incapable of making this work because of economic problems and an inability to actually BE a nation, but are doomed because they have  no idea what they are doing.

1 comment:

chipmunk said...

I'm thinking that sane, thinking people should get out of California while they can.