I have been wondering lately if California’s budget impasse was a harbinger of things to come? Robert Samuelson thinks it is.
Here’s the national lesson. There’s a collision between high and rising demands for government services and the capacity of the economy to produce the income and tax revenue to pay for those demands. That’s true of California, where poor immigrants and their children have increased pressures for more government services. It’s also true of the nation, where an aging population raises Social Security and Medicare spending. California is leading the transformation of politics into a form of collective torture: pay more (higher taxes), get less (lower services).
I was thinking it was 2-3 years ago, California was debating SchwarzenCare just as the Congress is now debating ObamaCare, and it fell apart for basically the same reason… cost.
California’s recent budget “fix” does little more than paper over the problems with shenanigans and accounting tricks. Down the road, when China finally cuts us off, the USA is going to have a budget reckoning like California. Obama is already opening the door to tax increases on the middle class. How large? Well, the current projected deficits roughly equal the amount of current tax collection. In other words, to close the deficits without budget cuts will require a doubling of taxes across the board.