Hotel California: Out of Business

California governor Arnold Schwarzenegger charged into office promising to reform California’s broken government. With a mere 20 months left in office, it looks like California will be in worse shape at the end of his tenure than at the beginning. With a $42 billion budget deficit, the state is on the verge of bankruptcy. With a series of referenda on the ballot today, the governor has staked his reputation on their passing.

Of course, the overarching similarity among the ballot measure is tax increases. It seemingly doesn’t matter that California already has the highest income and sales taxes in the United States, to go along with confiscatory corporate taxes. As we noted yesterday, antics such as these are leading corporations and individuals to move to low-tax states, such as Texas, Florida, and Tennessee. As Carol Platt Leibau says,

If residents of the other 49 states haven’t focused on California’s plight yet, they should. In a real sense, California has become liberalism’s “canary in the coal mine.” It is an instructive – and frightening – warning of the toll exacted by the kind of leftism now in vogue in Washington, D.C.

California is a test case, as Liebau says, that “liberalism’s golden promise of an efficient government that does everything for everyone is nothing but a pipe dream – and an expensive, destructive one at that.”

California may weather this economic downturn. And if it does, the destructive policies that led to these issues in the first place will likely be overlooked once again. And that’s a shame because California once represented the “can-do” American spirit–the idea that an individual could move somewhere and achieve the American dream with a lot of hard work and a little luck. Now, California is a sad example of what happens when politicians trade the American dream for European-style welfare statism.


Early returns show that 5 of the 6 ballot measures are headed for rejection. The one that is likely to pass? A measure to freeze state elected official pay in bad budget years–the one measure likely to have a positive impact, if minimal, on the state’s fiscal condition.


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