California ain't got the do re mi: Will Americans bail out the Golden State?

California is a garden of Eden, a paradise to live in or see;

But believe it or not, you won't find it so hot
If you ain't got the do re mi.

Woodie Guthrie

Just a few months ago, the California economy appeared to be in great shape. Governor Gavin Newsom predicted a $7 billion budget surplus for 2020, and the state had $16 billion in its rainy day fund.  

The governor was feeling so confident that he promised to distribute $75 million to the state's illegal residents.  Very thoughtful. But after all, what's $75 million to California, the world's fifth-largest economy?

But then COVID-19 came along like a drunken ex-spouse at your wedding reception, and the Golden State's economy began heading south.

Today, Governor Newsom projects a $54 billion budget deficit--more than three times the amount of the state's rainy day fund.  California has 4.2 million unemployed workers and huge healthcare expenses connected with the coronavirus. One in three Californians (13 million) are on Medicaid and can't pay their own medical bills.

And of course, California's financial problems are more severe than this year's budget deficit. According to the California Policy Center,California's state and local liabilities total $1.5 trillion.  

A lot of California's debt can be traced to high salaries paid to the state's civil servants and unfunded pension obligations to government workers.  California's public employees (professors, school administrators, hospital administrators, etc.) are paid well. In fact, about one-third of a million government employees draw salaries of $100,000 or more.  Over 1,400 of them are paid more than Governor Newsom.

California's state and local employees also enjoy great retirement plans. Some retired school administrators draw pensions of more than $300,000 a year.

California desperately needs a federal bailout to keep essential services going and to pay thousands of overpaid public workers. Indeed, Governor Newsom said he is optimistic about the state's economic future but, "My optimism is conditioned on this--more federal support." 

Hence, Nancy Pelosi's $3 trillion HEROES Act, which, if passed, will shower more than $1 trillion of federal money to distressed state and local governments.  If the Senate votes to approve Pelosi's bill, lots of federal money will arrive in California.

But there's just one problem with the HEROES Act. The national debt already tops $25 trillion. Pelosi's legislation will add another $3 trillion to that number.

So if the federal government bails out California, taxpayers in Kansas, Ohio, and Oklahoma will help pay the tab for those quarter-of-a-million dollar California pension benefits. The citizens of the Midwest will help fund the princely salaries of California's college professors and school superintendents.  

As Woodie Guthrie observed nearly 100 years ago, California is a garden of Eden and a beautiful place to call home. But the state's dwindling middle class is going to find that California is not so hot if you ain't got the do re mi to pay for a whole lot of high living by people who call themselves public servants.

But Governor Newsom, we ain't got the do re mi!

The coronavirus pandemic: Is it time to stock up on canned goods and ammunition?

On the last day of February, I was attending the annual meeting of the Texas State Historical Association in Austin, Texas. I was thinking about history, not the coronavirus.

Today, I am "sheltering in place" in my home in Baton Rouge and 10,000 Louisianians have been diagnosed with COVID-19. As Bob Wills and the Texas Playboys reminded us during the Great Depression, "Time changes everything."

In the twinkle of an eye, the stock market plummeted more than 11,000 points. Retired Americans lost a substantial amount of their saving, which they probably won't recover. The Federal Reserve Bank of St. Louis predicts an unemployment rate of more than 30 percent in the coming months, higher than during the Great Depression.

In my own extended family, four people have lost their jobs. My niece and her husband worked in New Orleans restaurants, and now they are both out of work. They have two small children.

Handguns, shotguns, and assault rifles are flying off the shelves, and some stores have run out of ammunition. A gunshop in my city ran a firearms sale recently, and you could pick up a 9 mm semi-automatic for less than $300.

Is it time to start stockpiling canned goods and ammunition?  I say not yet.

Americans are confident and self-reliant people. Our medical researchers and researchers in Asia and Europe will come up with a vaccine for coronavirus, and then we will all get vaccinated.  I believe we will conquer this virus within a couple of years at the latest.

The economy, however, is another thing entirely. President Trump signed a $2 trillion relief bill intended to head off a Depression.  But our government was running a deficit budget even before the pandemic began, and a $2 trillion bailout by itself won't bring my relatives' jobs back.

For a long time now, Americans have been living like "the road goes on forever, and the party never ends." But the party is over. At the governmental level and the personal level, we've borrowed too much money, and we can't pay it back.

We can take out more credit cards and print more money, but our reckoning day is near. When will it be time to start stocking up on canned goods and ammunition? Perhaps when the California and Illinois pension funds collapse.  Or when China starts dumping U.S. bonds.

Maxine Waters wants Americans to hassle Trump cabinet members in restaurants. Perhaps our politicians want to distract Americans from our real problems--like the student-loan crisis

Stephanie Wilkinson, owner of the Red Hen, a trendy eatery in western Virginia, asked Sarah Huckabee Sanders and her family to leave her restaurant. Why? Because Sanders works for the Trump administration.

"I explained that the restaurant has certain standards that I feel it has to uphold, such as honesty, and compassion and cooperation," Wilkinson told the Washington Post.

Good to know! If I ever make a reservation at the Red Hen, I'll keep my surly, callous, and truculent character to myself. I would hate to miss out on a $100 vegetarian dinner just because I failed a background check.

California congresswoman Maxine Waters publicly applauded the Red Hen's seating policy and urged her supporters to hound President Trump's cabinet members wherever they appear.  “If you see anybody from [the Trump] Cabinet in a restaurant, in a department store, at a gasoline station, you get out and you create a crowd and you push back on them and you tell them they’re not welcome anymore, anywhere."

President Trump called Waters "an extraordinarily low IQ person," but I disagree. Congressman Waters and most of the nation's other politicians--Democrats and Republicans--are trying to distract Americans from thinking about the nation's real problems--massive government debt, including the nation's budget deficit, the states' unfunded pension liabilities, and the nation's train wreck of a student loan program.

California alone has $1.3 trillion in government debt, and the state's unfunded pension obligations are staggering. The national deficit is $21 trillion, and the student-loan program has generated $1.5 trillion in outstanding student loans.

Distracting the public from massive public debt will continue working until it doesn't. And when Americans finally confront this crisis, they will find it a whole lot more distressing than Sarah Huckabee Sander's appearance at a snooty restaurant in western Virginia.

The Red Hen: "We reserve the right to refuse service to people we disagree with."

References

Patrick Gleason. California faces a $1 trillion unfunded pension liability and lawmakers focus on foam and plastic straws. Orange County Register, April 6, 2018.

McKenna Moore. Rep. Maxine Waters Tells Supporters to Harass Trump Cabinet Members. Fortune magazine, June 25, 2018.

Avik Selk and Sarah Murray.  The owner of the Red Hen explains why she asked Sarah Huckabee Sanders to leave. Washington Post, June 25, 2018.