California is one of the favorite whipping boys of the conservatives and Sumner is hardly an exception. No wonder they hate California so much-Republicans have been decimated there and its got a repuation as a liberal state where at present the Dems wholly dominate. Here was Sumner the other day, flagellating the Golden State again:
"I think it’s fair to say that modern American progressive thought is obsessed with two issues:
http://www.latimes.com/local/la-me-state-budget-20131121,0,4883962.story#ixzz2lorvQXrY
"I think it’s fair to say that modern American progressive thought is obsessed with two issues:
1. The need to defeat GOP obstructionism, so that progressive reforms can be enacted.
2. The need for higher income tax rates on the rich.
"If this is the agenda then California is the ideal. The GOP is dead and the Dems have dictatorial control. They just raised their top rate to 13.3%, and they are determined to build a “high speed rail” line from LA to San Francisco. (The scare quotes reflect the fact that the Chinese would laugh at the “high speed” claim.)
Today I saw a list of the best governed states in America. California came in 50th out of 50. In fairness, this ranking was based on 2012 figures, and doesn’t account for California’s recent success in producing a “balanced budget.” (Scare quotes again—here’s why.) But next recession their fiscal regime, which is more leveraged to stock market gains than the average hedge fund, will once again collapse like a house of cards. They have America’s highest taxes on the rich and the following outcomes:
The Golden State was also among the worst states in the nation for educational attainment, health coverage, and unemployment.
"Even worse, this policy failure occurred in a state that in many ways is extremely “lucky.” California has some of the most delightful weather and beautiful scenery in the world. It is very rich in oil resources. They are able to attract highly productive people to this environment despite high tax rates. Imagine how California would be doing if they had Texas weather and scenery."
"I sympathize with some of the complaints of modern progressives. Yes, the filibuster is (was?) a bad idea. Yes, the modern GOP has regressed significantly from the Reagan era. But I think the long period of conservative dominance, and then policy deadlock, has led many progressives to underestimate the difficulties of enacting a liberal vision in a polyglot society of 320 million people. They have forgotten what caused the conservative resurgence in 1980. It’s really, really hard to make a big and activist government work. No one else has made an activist government work in a country so large. And based on the results from California and New York, it also seems difficult to implement in large states."
California is considered the 'worst governed state' by Forbes Magazine and some Wall St. analysts who focus on debt levels and deficits and little else. Confirmation bias anyone? Here is Forbes:
"California has the highest income taxes in the country, the highest gas taxes, the most regulations of any state and-surprise- the 4th highest unemployment rate.(which as every serious person knows is understated)."
What 'every serious person' ought to know is that California was hit like few other states were by the housing bubble-along with Nevada.
Here is Krugman on California, however, the contrast with Sumner makes one think of 'It was the best of times, it was the worst of times...'
"Among the many vituperative reactions I had to yesterday’s column, one recurred a lot — namely, the assertion that California’s rising enrollment in Obamacare would bankrupt the state, which is already a fiscal basket case.
Many of the vituperative reactions likely were Sumner readers who believe all his razzing.
"Guys, you do need to keep up a bit."
"First of all, the Obamacare subsidies — both the credits for insurance purchased on the exchanges and the Medicaid expansion — are paid for by the federal government. In fact, implementing Obamacare is a major fiscal and economic boost to any state that does it, and states opting out of the Medicaid expansion are going to have significantly lower overall incomes and fewer jobs than if they had gone along. (My back of the envelope says around 1 percent of GDP, but I’m still working on that.)"
"Beyond that, however, the California as fiscal basket case narrative is way, way out of date. Jerry Brown and the huge Democratic majority in the legislature have turned that situation completely around."
"I know, it’s not supposed to be that way — and a lot of people will stick to their narrative, never mind the facts. But anyway, California is doing OK, both on health care and on budget policy."
Here is the NYTimes article Krugman links to above:
"California's finances are improving faster than expected and schools could receive billions in extra funds next year, according to the Legislature's budget advisors."
"The state's budgetary condition is stronger than at any point in the past decade," a report released Wednesday says.
"Higher-than-expected revenue, driven by the economic recovery and stock market gains, could pump more than $4 billion in unanticipated funds into schools and community colleges starting next summer, the report says."
http://www.latimes.com/local/la-me-state-budget-20131121,0,4883962.story#ixzz2lorvQXrY
So here is a state which certainly did not practice MM, hasn't done austerity-which means cutting taxes on the rich and raising them on everyone else-whether through higher taxes or lower spenidng it's effectively a tax hike-and is doing very well and has now been able to end its own sequester.
"In addition, the analysts say, the state is on track for multibillion-dollar surpluses over the next several years, a potential cushion against the expiration of Gov. Jerry Brown's temporary tax hikes in 2018.
Good thing Alan Greenspan doesn't live in California huh? Or he'd be testifying that you have to get rid of that surplus in huge tax cuts for the rich or the surplus will do terrible things. He actually worried in 2001 that with so little debt the Fed would be hampered in doing monetary policy!
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