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California is facing serious economic and political problems. How we deal with these problems will affect both California and the nation.
In this first essay of our Advice to the Governor public policy series, the Claremont Institute's William Voegeli explains that we must strictly limit spending, and we must do it repeatedly rather than just enough to get us through the next budget or election cycle. The path forward is simple but not easy. Ballot measures that seek to restrain budgets and revenues are unlikely to provide lasting solutions unless our legislature and governor are committed to fiscal rectitude. In this long-building crisis, we have great opportunities. As Voegeli puts it, we are likely to see not a teachable moment but a "teachable decade." The time to act is now, for we cannot escape the inescapable any longer.
Voegeli is the author of Never Enough: America's Limitless Welfare State and a contributing editor of the Claremont Review of Books.
Introduction
In the tense and frightening year of 1932, two political leaders offered Americans reasons to hope that prosperity could be restored, and progress reclaimed, through innovative public policy. Both of their concepts remain familiar today. The first of these modern-day liberal formulations came in a dissenting opinion in New State Ice Co. v. Liebmann, decided by the United States Supreme Court. Justice Louis Brandeis wrote in opposition to the majority's ruling that an Oklahoma law restricting entry by new companies into the ice business was unconstitutional. In his dissent, Brandeis said:
The discoveries in physical science, the triumphs in invention, attest the value of the process of trial and error. In large measure, these advances have been due to experimentation. In those fields, experimentation has, for two centuries, been not only free, but encouraged. . . . There must be power in the States and the nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs. . . . It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.1
Two months later that spring, Governor Franklin Roosevelt of New York gave a commencement address at Oglethorpe University in Georgia. Although Roosevelt was the leading Democratic candidate for the presidency, his nomination at the upcoming convention was far from assured. In speaking to graduating students who were apprehensive about beginning their careers amid the Great Depression, Governor Roosevelt spoke to the economic anxieties of the whole nation as well. In the most famous passage of this speech, he said:
The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.2
Without mentioning his name, Brandeis and Roosevelt seemed to have been invoking the memory of Thomas Edison, who had died in 1931 at the age of 84: We'll put the Depression behind us, much as we put candles and gas lamps behind us, when fearless government leaders set the nation's economic problems on a workbench and apply Edison-like ingenuity, determination and confidence to solving them.
It is understandable why political leaders would choose, in exceedingly grim circumstances, to accentuate the positive. But the need to undertake "bold, persistent experimentation" in the laboratories of democracy has been invoked repeatedly since 1932, in many political and economic circumstances. Turning that exhortation into a rule ignores its many problems.
The most important of these problems is that governments, especially democratic ones, are not really laboratories. They do not exist to ascertain what's true, which is the work of pure science. Nor do they exist to determine what works, the concern of applied science. Their purpose is to serve a free people, justly, within the bounds of the constitution. Real laboratories are places where hypotheses or theories are typically disproven and rejected by the scientist, where prototypes or models are routinely demolished. Democracies are fundamentally inappropriate to that "creative destruction." To illustrate the point, let us rephrase Senator Howard Baker's famous question from the 1973 Watergate hearings: What is it that we don't know about Amtrak, and when will we know it? What lab results are we still awaiting, 38 years after Amtrak was established, that will prove or disprove the viability of a publicly owned corporation providing passenger rail service in a vast nation of frequent fliers and interstate highways? Every year this question remains pending is a year that costs the federal government another $2.6 billion in subsidies.
Amtrak doesn't persist because we do not yet know whether it's a good idea. It persists because it doesn't matter, politically, that it's a bad idea. In the years since 1932, American state and local governments have sometimes tried bold, persistent experimentation. On occasion they have resorted to the "above all, try something" standard. It's the part about frankly admitting failures—and then decisively abandoning them—that democracies don't do very well.
That part turns out to be very important, since our ability to conduct new policy experiments is lessened by our inability to drop old ones. People keen on new programs, laws and regulations should be, but seldom are, especially mindful that the nation's economic resources and the citizens' patience are finite. At the dawn of the Great Society, the sociologist Nathan Glazer wrote: "How one wishes for the open field of the New Deal, which was not littered with the carcasses of half-successful and hardly successful programs, each in the hands of a hardening bureaucracy."3 Men like Justice Brandeis and Franklin Roosevelt could be hopeful about policy experiments in 1932, confident that failures would be rare and readily discarded, in part because men like Brandeis and Roosevelt had been given few opportunities before 1932 to conduct such experiments.
Our federal and state governments are bad laboratories because they are far more amenable to "rent-seeking" than truth-seeking, far better at providing narrow, unmerited advantages to savvy, well-connected and relentless special interests than at discovering measures that are comprehensively beneficial to the public. As a result, sclerotic and dysfunctional interest-group liberalism usually shows greater strength and durability than public-spirited, truly innovative liberalism. Amtrak provides much of its service to the states and districts of powerful legislators. They, in turn, use their positions on congressional committees to guarantee that unprofitable and underutilized routes are never abandoned. Thus Amtrak is never shut down, despite its inefficiency and its failure as a policy experiment.
Brandeis's assurance that an individual state may pursue its innovations without risk to the others is now as dubious as FDR's expectation that failed experiments will cause bad policies to be abandoned. The idea that the states could govern themselves in simple isolation made a good deal of sense back in 1932, before the New Deal's regulatory policy and intergovernmental transfer payments reduced the autonomy of the states and localities. In the interconnected America of the 21st century, the idea that the courageous citizens of a single state may try novel experiments without risk to the rest of the country is about as reassuring as observing that fellow ship passengers are limiting themselves to drilling through the hull far away from one's own cabin. The innovations undertaken by Louisiana in disaster preparedness and response, for example, will significantly affect taxpayers in the other 49 states for many years beyond Hurricane Katrina.
The idea that bad policy experiments will be benign, easily confined to just one time and place, is especially doubtful in the most populous state, as California has been for nearly half a century. Not since 1860 has a single state accounted for such a large share of the country. In 2007, just over 12% of the U.S. population lived here.
For most of California's history, its population grew faster than the rest of the country's. When it was admitted to the union in 1850, the 92,600 Californians were less than half of 1% of the national population. That increased to 2% by 1900, doubled to more than 4% by 1930, and doubled again to almost 10% in 1970.
Yet over the past two decades, the California population growth rate has barely equaled the rest of America's. Because the comprehensive (and readily retrievable) Census Bureau data on state and local finances begins in 1992 and currently runs to 2007, I have compared the bureau's annual population estimates for those two years. They show that the population in California grew by 18.39%, little more than the 18.25% for the rest of the country. The second—and third—most populous states, Texas and Florida, each saw its population increase by 35% between 1992 and 2007—more than twice as fast as the rest of the nation. The fourth-largest state, New York, increased by just 6.72% during those years, far below the 19.15% population growth of the other 49 states plus the District of Columbia. By 2007, those four largest states accounted for nearly one-third of the national population.
Voting With Their Feet
Such facts are important to know and understand because in our federal system the states compete against one another—for residents, taxpayers, businesses, investments and jobs. In a country as big and diverse as America, the states aren't all competing for the same residents and jobs, however. Much as Neiman Marcus and Walmart seek the business of customers with divergent tastes and budgets, different states seek and attract different people.
It is for this reason that the New York and California approach, in which state and local governments extract relatively large amounts of revenue through high taxes and other means while spending more than most other states on public services, has its defenders. They deny that we are uniformly a nation of Walmart shoppers when it comes to taxes, that we're all much more concerned with price than with the quality of what we're buying. The economist Jed Kolko of the Public Policy Institute of California, for example, criticizes "business climate" rankings, which typically concentrate on each state's tax and regulatory environment. "The skill level of the workforce, availability of capital, support for new business and overall quality of life are important aspects of the state's business climate as well," he contends.4
Kolko has a point, which one of the most commonly cited rankings, the Tax Foundation's assessment of each state's "business tax climate," inadvertently supports. According to its 2010 rankings, the states with the four best business tax climates were, in order: South Dakota, Wyoming, Alaska and Nevada. Despite the low taxes on their own residents and businesses, none of these sprawling states will need to worry about overcrowding anytime soon. In terms of population, they rank 46th, 51st, 47th and 35th respectively. Combined, they held less than 1.5% of the national population in 2007. The four states with the worst business tax climates according to the Tax Foundation—Ohio, California, New York and, dead last, New Jersey—had, together, just over one-quarter of the population.5
One moral of the story, a sobering one for conservatives, is that states generally have high taxes because they can, and keep them low only if they must. The advantages states can exploit financially include: cultural and educational institutions built up over many decades; an identifying mythology (New York's vigor and sophistication, or California's laid-back ease); a pleasant climate; good natural resources; and well-established industries. Even when these advantages describe a state's past better than its present, tax codes can still exploit people's inertial reluctance to move away. By contrast, states that never enjoyed many such advantages have little choice but to keep taxes low. "Where else are you going to go?" is not a smart question for elected officials to pose to South Dakota's 800,000 residents.
During the New Deal and the long economic boom after World War II many states, especially urbanized and industrialized ones, grew wealthier and more populous while imposing high taxes to finance an expansive public sector. California was one of them. "From the 1920s on," the urban scholar Joel Kotkin has written, the state's "prevailing ideology was a kind of business-like progressivism. Californians in both parties embraced the idea that government could be a positive force in the economic and social life of California." Government would be active, but would also be disciplined about controlling its costs and getting tangible results.6
This pragmatic approach, according to Kotkin, came to be "undermined by rising interest-group liberalism." Kotkin—who calls himself a "Pat Brown Democrat," after California's governor from 1959 through 1966—laments that by the 1990s, as "pet social programs, entitlements, and state employee pensions soared, infrastructure spending—the hallmark of the Pat Brown regime and once 20 percent of the state budget—shrank to less than 3 percent."7
The Census Bureau data on American moving habits and on the growth rates of the various states suggests that the demise of this vigorous but rigorous use of government spending to attract and retain people and investments is a national phenomenon, not simply a California one. The alternative hypothesis, that we have recently become a nation of "taxaphobes," uniformly indifferent to the superior quality of life in states that spend heavily on public programs, is far less plausible.
Consider the eight states whose populations grew at least twice as fast as the rest of the country between 1992 and 2007. In every one of them, per capita government expenditures (state and local combined) were below the $8,809 national average
The states whose populations grew less than half as fast as the rest of the country are a larger and more diverse group:
If minimizing government expenditures was the key to attracting and retaining taxpayers and businesses, it's hard to explain why West Virginia's share of the national population decreased by 15% between 1992 and 2007 while Idaho's grew by 18%.
No state had lower government outlays than Idaho, yet West Virginia's per capita expenditures in 2007 were only $391 higher than those in Idaho. Similarly, Iowa's governments spent $43 less per capita than Florida's in 2007, yet Iowa's share of the national population declined by 10% between 1992 and 2007 while Florida's rose by 14%.
It seems fair to conclude that one factor, but only one, explaining why some states' populations grow much faster than the rest of the country's, while others grow much slower, concerns how much and how well the state and local governments tax and spend. That is, it's always good for a state's governments to give its residents excellent rather than dubious value for their tax dollars, but there are some problems efficiency cannot overcome, even as there are some advantages that inefficiency cannot dissipate.
States prosper and grow for good reasons, and they decline for equally fundamental ones. The same is true of cities, as the economist Edward Glaeser has argued. Buffalo, New York, he points out, had a population of 573,000 in 1930, making it the thirteenth largest city in America. That population declined by 55% over the next 75 years, during which the total national population increased by 140%. According to Glaeser, Buffalo's grew because of advantages—proximity to the Erie Canal, and then cheaper and more plentiful electricity because of proximity to Niagara Falls—that were nullified by advances in transportation and energy technology. After World War II, as air conditioning made the South and West a more attractive place to live and work, Buffalo found it harder and harder to attract or retain businesses and residents.8
We need, says Glaeser, to keep sight of the distinction between helping people and helping places. The best thing the nation, especially the national government, can do for Buffalo or West Virginia, in other words, is to strengthen the human capital of its residents through well-designed and delivered education and training programs. Though it's not the explicit goal, the inevitable consequence of providing such help to the people of Buffalo and West Virginia will be to help many of them leave Buffalo and West Virginia.
California, however, isn't Buffalo or West Virginia. It is—or used to be considered—part of the Sunbelt. In terms of climate and natural resources, there is no reason it should have stopped being competitive with thriving states like Nevada, Arizona, Georgia, Texas and Florida. The fact that all those states are growing rapidly in population, while California is barely keeping pace with the rest of the country, suggests that although good governance can't rescue intrinsically disadvantaged states, bad policies can eventually harm even the most fortunately situated ones.
California's share of the national population would have fallen, rather than stayed level, if not for immigration from abroad. Between 2000 and 2007 there was positive internal migration in 27 states, meaning more people moved into the state from elsewhere in the U.S. than left for other states. Of the 24 states that had negative internal migration, losing net population to other states, California is one of only nine that gained more people from abroad than it lost through internal migration. Although the disparities in the other eight of these nine states are not dramatic, California had a net gain of 1.81 million people from outside the country in a 7¼-year period when it lost 1.22 million people to other states. Given that so many of the immigrants to California are from Mexico and elsewhere in Latin America, this means that while the economic opportunities and quality of life in California are looking less and less attractive compared with Nevada, Arizona, Texas or Florida, they are still perceived for the time being as superior to Oaxaca's or El Salvador's.9
California and only six other states had per capita government outlays in 2007 that were at least 10% higher than the rest of the country's. 
Of these eight jurisdictions, California's population increased slightly faster than the rest of the country's between 1992 and 2007, while Delaware's increased much faster, by 25.3% compared with 18.2% everywhere else. All the others on the list grew more slowly than the rest of the country. Massachusetts, New York and Washington DC, as we have seen, lost significantly in share of national population, growing at less than half the national rate.
Alaska and Wyoming are high on the government-spending list because their public finances rest on economies based on extraction industries, whose companies are not in a position to take their business elsewhere just because the states subject them to very high taxes.They can't really "vote with their feet," so they're especially vulnerable to politicians who enact tax policies that exploit their immobility. In their way, the District of Columbia and Delaware are also extraction-based economies—deriving revenue from, respectively, the federal government and companies attracted by favorable incorporation laws.These options are not available to other states.
That leaves California, Massachusetts, New Jersey and New York on the big-spender list. It's easy to see how the last three are alike. They are in the same part of the country, and have the same kinds of challenges in terms of aging infrastructure and declining industries. Because California isn't part of the Rust Belt, its wounds are to a much larger extent self-inflicted. Even if New York had been governed flawlessly over the past 30 or 40 years, it would probably still have big problems today because of global shifts in economic activity, especially manufacturing, over which governors, state legislators, mayors, city councils and school boards have very little control. By contrast, if California had been governed adequately over the same period it would likely be in pretty good shape today, given the progress made by other comparably advantaged Sunbelt states.
This result is especially strange and sad. Contrary to the hopeful claims about the states serving as the laboratories of democracy, California has faltered by consistently emulating the failed experiments of declining states like New York rather than the successes of growing ones like Texas and Florida. The narrative arc of New York's decline, recently traced by historian Fred Siegel, is strikingly similar to the demise of California's business-like progressivism except that it became manifest three decades sooner.
As late as the 1950s, according to Siegel, "vigorous upstate business interests" exerted enough political influence to partially frustrate Albany's big-government ambitions. The "runaway spending and punitive taxing" of Nelson Rockefeller, New York's governor from 1959 to 1973, changed all that. Every state with a Great Lakes shoreline (an approximate definition of the Rust Belt) has faced a daunting economic challenge over the past half-century. But Rockefeller's policies worsened an already dire situation. "If you count New York north of greater Gotham as a separate state, it has ranked between 46th and 50th in the U.S. in job growth over the past 40 years," Siegel notes. Much of the rural upstate "has sunk into Appalachian hardship" while the "young and talented have left the region in droves."10
The heavy spending, taxes and regulations, while accelerating the decline and departure of the upstate region's private sector, also weakened the countervailing power of the business interests vis-à-vis big government. "The Business Council of New York State, once an influential group representing Fortune 500 CEOs, has none of its former clout. These days, businesses, if they're powerful enough, push for tax-incentive deals for themselves instead of pursuing shared interests with other firms."11
That decline and political weakening of upstate business strengthened the power of the New York City liberals and the state's public-employee unions, which resulted in more taxes and regulations, which caused more businesses to leave New York. As the wealth builders have lost the ability to make much political difference, the wealth extractors have gone from strength to strength:
New York's well-to-do public-sector unions—with their phone banks, massive Election Day get-out-the-vote efforts, and ad campaigns—have only grown mightier with each passing year. Political success for New York pols rests on keeping the most powerful pressure groups happy by spending more than the state or city can afford. . . . [T]he business lobbying comes and goes, while the unions pushing for ever more education and health-care spending are permanent fixtures.12
The correlation of political forces in California is not, yet, as lopsided as New York's. As a result, California state and local governments spend about one-quarter more than those in all the other states, while government in New York spends half-again as much as in the other states. On the other hand, California's per capita governmental expenditures, adjusted for inflation, were 22.8% higher in 2007 than in 1992, while New York's were only 14.6% higher. Our state's public sector and political leadership appear even more determined than New York's were to engage in slow-motion fiscal suicide. Per capita state and local government spending grew by 18.7% nationwide between 1992 and 2007. The figures for Florida and Texas were 23% and 18% respectively. Nevada, the fastest-growing state in terms of population, saw per capita government spending increase by less than 1% during those years.13
Delivering On Promises
It is impossible to imagine that California will ever transform itself into a Walmart state, one that is trying to attract and retain residents who are primarily interested in low taxes and the most basic public services. If, however, its destiny is to be a Neiman Marcus state—or, more realistically, a Nordstrom or Macy's—it is all the more important to deliver on the promises implicit in its high taxes and spending. As Indiana's governor Mitch Daniels says: "[M]easured provable performance and effective spending ought to be a goal that unites advocates of limited government and advocates of expansive government. . . . I argue to my most liberal friends: ‘You ought to be the most offended of anybody if a dollar that could help a poor person is being squandered in some way.' And some of them actually agree."14
But a lot of liberals don't agree, or act as if they don't. It seems that the moral imperative to help the most vulnerable among us is constantly being compromised, and routinely trampled, by the political imperative to maintain a coalition embracing everyone who seeks to gain some advantage from the government's redistribution of wealth and power. If California has a prominent Democratic politician, activist or editorialist who has said it's outrageous for more than 12,000 retired civil servants and educators to receive pensions worth over $100,000 per year—that it's shameful even to pretend this is the best and highest use of our state's finite resources—it is an exceptionally well-kept secret.15
By contrast, it's an open secret that 32 years after the passage of Proposition 13, the holy grail of California Democratic politics is to repeal (or at least gut) that Bunker Hill victory of the state and national tax revolt. The reason why squandered expenditures do not offend most advocates of expansive government is that it's far more congenial to them, far less divisive for their coalition, to stress the need to pour more dollars into the government's money pipes than to fix the growing leaks or protect against siphoning. Per-pupil public school expenditures in California are 4% higher than in Florida and 12% higher than in Texas, according to the U.S. Department of Education. Yet California's fourth—and eighth—grade students rank near the bottom of the nation in both math and reading test scores, while those in Florida and Texas are slightly above the national average. Despite its higher per-pupil expenditures, California has one teacher for every 20.9 students—much lower classroom staffing than the one teacher per 16.4 school children in Florida, or the one per 14.8 in Texas.16
For liberal interests and spokesmen, there seems to be only one possible conclusion from this data: "The real problem that needs to be addressed to solve California's budget problems is Proposition 13," according to the California Federation of Teachers. "The problem isn't [government] ‘overspending,'" it insists. "Don't let people tell you that ‘we don't have the money' for a decent public education system. The money's there. It's just in the wrong bank accounts."17 The "wrong" bank accounts, to be clear, are ones belonging to taxpayers. The "right" ones are those held by members of the CFT and the many other public-employee unions, where the tax dollars are destined to reside after a brief layover in the state treasurer's bank accounts.
Reviled as Proposition 13 has been by many critics, its record in terms of controlling how much money the public sector acquires and spends has been quite mixed. By 2007 California's state and local governments had the tenth-highest per capita tax receipts in the country. And even at that, taxes generated a remarkably small 37% of California government revenues in 2007, the tenth-lowest percentage of any state. (The proportion for the rest of the country was 42.5%.) In contrast, governmental income from all sources—taxes, fees, insurance trusts, utility revenues, and transfers from the federal government—was $12,776 per capita in California. That's higher than in all but three states and the District of Columbia. California officials, in other words, adapted to their restricted ability to generate tax revenue by becoming proficient at increasing fees and charges that don't qualify as taxes, even if they feel like it to residents.
Proposition 13, of course, is primarily concerned with property taxes, just one of the public sector's revenue streams. What California really needs, if it wants to discipline its government, is a comprehensive limitation on public expenditures and revenues. Governor Arnold Schwarzenegger's first two years in Sacramento were preoccupied with battles over spending limits and the state's "structural deficit," which culminated in the campaign for and the November 2005 defeat of Proposition 76, an initiative to limit the state's budget.
You could have followed that debate closely, however, without realizing that California already has a comprehensive budget limitation on expenditures in its constitution—Proposition 4, passed overwhelmingly by the voters in 1979. Also known as the Gann limit after the tax activist and its chief proponent Paul Gann, Proposition 4 prohibits state spending increases that exceed increases necessary to keep up with inflation and population growth. It also requires that the state give any resulting surplus revenues back to the people through tax rebates.
Although Proposition 4's limits were rendered less stringent after 1990 by Proposition 111, an initiative placed on the ballot by the legislature, it could still, on paper, arrest the growth of government. The recent conclusion of three political scientists at UC San Diego, however, is that the "Gann limit has rarely constrained the growth of state government" because in reality "its spending limit binds very little, if at all."18
The scholars contend that Proposition 4's marginalization "is not terribly surprising."
Expenditure and revenue limits belong to a general class of political phenomena that attempt a tough trick: locking in the preferences of a set of political principals by constraining the future actions of potentially hostile agents. Either voters are trying to limit state lawmakers, or legislators in one era are attempting to slow the growth of government under future lawmakers. Regardless, the proponents of these limits face the common principal-agent delegation problem, made especially challenging by the fact that they are trying to constrain behavior long into the future, when they are likely not to be around to monitor it.19
To make the same point less clinically, political problems require political solutions, of which policy solutions are only one component. Proposition 4's inability to restrain spending is not fundamentally a policy failure, one that could be corrected by more adroitly crafted specifications about how taxes and spending would be limited, or about how taxpayers would be guaranteed their surpluses and rebates. Rather, it was a political failure based on the belief that fiscal limits, once passed by the voters, would be self-implementing. California's advocates of limited government acted as if the war had been won, while the coalition favoring practically unlimited government acted as if a single skirmish had been lost.
The Key To A Successful Diet
There have been reforms of the budget process at both the federal and state levels in the past 40 years. The single analysis that best describes their effects is this: Budget reforms cannot make legislators do what they don't want to do, and legislators will not do what voters either don't want or won't demand. One analysis of tax and spending limits in state constitutions found that the best predictor of whether they would be adhered to was the fiscal conservatism of the state legislators charged with implementing them.
In other words, budget limits work best where they're needed least.20
California's elected officials will have to cope with the state's fiscal crisis for the foreseeable future. Coping with it, however, includes not letting the crisis go to waste. The imbalance between the state's spending commitments and its resources presents a teachable moment that is likely to turn into a teachable decade. What the laboratory
of California's democracy has shown is that California's democracy is not much of a laboratory. It is receptive to experiments that augment the government's wealth and power. It is hostile to ones that impose strict fiscal and performance standards on governmental activities. One challenge for California's future leaders, including the next governor, is to come up with better, more successful policy innovations for restraining and monitoring public expenditures. An even larger and more important challenge is to exercise the political leadership, year-in and year-out, that would make California a better laboratory, one that corrects its inherent bias against governance that is fair, frugal and effective.
More so than most states, California needs to go on a strict, long-term fiscal diet. As anyone who has ever endured one knows, diets succeed or fail as a result of will power, not because of the ingenuity of the latest "findings" that promise you can eat all your favorite foods, never feel hungry, and still lose weight. The temptation to place great faith in the discovery of an exciting new fiscal formula that will cause California's excess spending to magically melt away has to be resisted. California is not saddled with a large structural deficit and an under-performing public sector because its political leaders haven't been clever enough, but because the leaders and followers haven't been candid and disciplined enough. The policy measures that lead California back to solvency and growth will be noteworthy not for their ingenuity, but for their obviousness. The key will be the political perseverance of the state's leaders, who commit to no higher priority than wringing excess spending out of all governmental budgets, and wringing the maximum benefit out of each dollar that does get spent at any level of government in California. In a democracy, the success of that endeavor requires not just the determination to act, but the determination to explain—patiently, clearly, repeatedly and respectfully—why the state has come to grief by living beyond its means, and can only be restored to health by living within them.
1 New State Ice Co. v. Liebmann, 285 U.S. 262 (1932), at 310-311.
2 Franklin D. Roosevelt, Address at Oglethorpe University, May 22, 1932; reprinted in The Public Papers and Addresses of Franklin D. Roosevelt, Vol. 1, 1928-32, (New York: Random House, 1938), p. 639; http://newdeal.feri.org/speeches/1932d.htm.
3 Quoted in Daniel Patrick Moynihan, Maximum Feasible Misunderstanding: Community Action in the War on Poverty (New York: Free Press, 1970), p. 5.
4 Jed Kolko, "California Loses Few Jobs to Other States," San Francisco Chronicle, May 8, 2009, p. A-23; http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/08/ED1117GHGJ.DTL&hw=industries&sn=002&sc=998.
5 The Tax Foundation, "State Business Tax Climate Index Rankings, 2006-2010"; http://www.taxfoundation.org/taxdata/show/22661.html.
6 Joel Kotkin, "Sundown for California," The American, November-December 2008; http://www.american.com/archive/2008/november-december-magazine/sundown-for-california/?searchterm=Kotkin.
7 Kotkin, "Sundown for California," and Joel Kotkin, "Can California Make a Comeback?" Forbes, May 26, 2009; http://www.forbes.com/2009/05/25/golden-state-deficit-schwarzanegger-opinions-columnists-california.html.
8 Edward L. Glaeser, "Can Buffalo Ever Come Back?" City Journal, Autumn 2007; http://www.city-journal.org/html/17_4_buffalo_ny.html.
9 U.S. Census Bureau, "State Resident Population - Components of Change"; http://www.census.gov/compendia/statab/tables/09s0015.pdf
10 Fred Siegel, "Madison's Nightmare," City Journal, Spring 2009; http://www.city-journal.org/2009/nytom_madisons-nightmare.html.
11 Ibid.
12 Ibid.
13 Calculations based on U.S. Census Bureau, "State and Local Government Finances, 1992" (http://www2.census.gov/govs/estimate/92censusviewtabss.xls) and U.S. Department of Commerce, Implicit Price Deflator for State and Local Consumption and Investment Expenditures(http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=13&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1994&LastYear=2008&3Place=N&Update=Update&JavaBox=no)
14 Mark Hemingway, "Mitch the Knife," National Review, June 8, 2009; http://nrd.nationalreview.com/article/?q=OWMyMzc0MjRiZjEwYTRmODc2ZDkxYjhhMGNmNDNkZGY=.
15 Data from the California Foundation for Fiscal Responsibility website; http://www.californiapensionreform.com/database.asp?vttable=calpers.
16 Data from the "Nation's Report Card" at the National Assessment of Educational Progress, National Center for Educational Statistics, U.S. Department of Education; http://nces.ed.gov/nationsreportcard/states/.
17 "Background of the Budget Gap," California Federation of Teachers website; http://www.cft.org/index.php/current-issues/245-state-budget.html.
18 Thad Kousser, Mathew D. McCubbins and Kaj Rozga, "When Does the Ballot Box Limit the Budget?" Paper prepared for "Fiscal Challenges: An Interdisciplinary Approach to Budget Policy," February 10, 2006, University of Southern California Gould School of Law, pp. 1-2; http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1003326_code843376.pdf?abstractid=1003326
19 Kousser, McCubbins and Rozga, p. 2.
20 Robert Erikson, Gerald Wright and John McIver, Statehouse Democracy: Public Opinion and Policy in the American States (New York: Cambridge University Press, 1993), cited in Kousser, McCubbins and Rozga, p. 34.
