Gov. Brown's Greased Pig Deficit Problems

At State Fairs, it always good for a laugh to see the greased-pig events with the competitors flopping and flailing around while trying to get their hands on that slippery little hog. But, when a Governor does the same thing while trying to define his State's deficit problems, it's not so funny.

Back in January, Governor Jerry Brown projected California's budget deficit to be $9.2 billion.  Then, on May 14th, he said his "new" projection was $16 billion.  Five days following that declaration, a non-partisan, independent analyst of the State legislature said that number was off by a billion dollars; indicating that the actual deficit number is closer to $17 billion. 

It seems to me that if you don't even know how big a problem you have, you won't be able to fix it.  For that reason alone, Governor Brown is totally incapable of rectifying California's debt problems.  However, Brown's budgetary incompetence goes even further.  In typical liberal fashion, he wants to solve California's budgetary ills by raising taxes on the rich while, at the same time, talking about spending $100 billion for a high speed rail system and another $15 billion for a revamp of the State's water system.   On top of all that, he wants an immediate increase of $5 billion a year in education.  And, if he doesn't get his tax increases?  Well, he's told the voters that he will be forced to make "painful" cuts in education and public safety.

Obviously, Governor Brown doesn't seem to understand that spending is at the heart of California's deficit woes.  The state is drowning in debt and he keeps filling the pool with water. Even if he does get his millionaires tax, the spending will still exceed revenues.  It seems everyone knows this except  the governor and all the voters who elected him.  Obviously, Chicago columnist Mike Royko's labeling of Brown as "Governor Moonbeam" in 1976 is as true then as it is today.  Royko was also right when he said that California was “the world’s largest outdoor mental asylum.”

The Grecian Formula?

As I write this, the Central Bank of the European Union (the ECB) is putting together a $60 billion (in U.S. dollars) rescue package (a loan) to save Greece's bacon and keep it from completely collapsing into utter financial chaos. But, all this loan will do is delay the inevitable if Greece doesn't comes to grips with the bad financial housekeeping that got it into this problem.

Greece is like so many countries who are heavily burdened by too many expensive social programs and labor union related issues. Raising taxes just won't do it because taxes are already high and any new ones will just kill what's left of a fast declining economic environment. The problem of trying to cut back on social programs, excessive union labor rates, and spiraling expenses for fat retirement packages is that no one wants to give up their particular "program" or a "percentage of their wages" or "retirement pay and benefits". But, if Greece doesn't cut into all these costly programs, it will just burn through that $60 billion dollar loan like a brush fire in a drought-ravaged forest and, once again, find itself facing collapse. Greece, itself, has claimed that it really needs $160 billion to remain solvent over the next three years.

What is happening in Greece is bound spread to other Euro-Socialist countries. Licking the heals of their financial morass is Portugal, Spain, Ireland, and Iceland. Not far from that pack is Italy. So, if it spreads, you've got to wonder if the European banking system will be able to float another $100 billion more for Greece and, then, bailout Portugal. Or, another $100 billion for Spain; and, so on. I don't think so. If that should happen, and in a worst case scenario, the world could literally see a complete collapse of Europe's banking system.

If so, would the U.S. and other nations come to Europe's aid with the equivalent of an international TARP rescue program? Just maybe! And, that could actually put us at risk for collapse, also. That's because some of our own "states" are quickly closing in on their own financial crises. Right now, California is close. Like Greece, it has all the earmarks of a government gone wild with social programs, union wages, and generous pensions. Other states like New Jersey, New York, Arizona, and Illinois aren't that far behind. All together, our 50 states had a near-$50 billion combined shortfall for last year, alone; and, all see those numbers growing into this year and beyond.

These are very troubled times. Perhaps, just a calm before the ultimate storm.

The Labor Unions: A Very Special Interest!

Contrary to the precepts of all previous bankruptcy proceedings in the history of the United States, the United Auto Workers were given preference over both creditors and stockholders and wound up with an ownership interest in the New General Motors Corporation and a controlling interest in the new Chrysler (Click to See Full Story:" How the UAW's new ownership stake in GM and Chrysler will defang the union").

When California was trying to come to terms with it's budget problems, the option of cutting worker hours and pay may have been stifled by the influence that the SEIU (Service Employees International Union) had with this White House (Click to See Full Story: "SEIU May Have Pressured White House into Withholding Stimulus Funds for California")

When, hammering out ways to pay for the impending health care reform bill, union health care benefits would not be taxed while everybody else's would be (Click to See Full Story: "Union workers would be exempt from Dem health care tax").

Now, it appears that the AFL-CIO is pushing tax legislation through this all-too-friendly Congress (Click to See Full Story: "AFL-CIO, Dems push new Wall Street tax").

Lastly....Obama's words: