Wednesday, September 18, 2013

How the Media invented "the California Comeback"

Did you know that California is in the midst of a 'comeback'?!?

Neither did we.

According to the the Burnt Orange Report and the New York Times, however, big liberal California has come zooming back; this absurd piece at Rolling Stone epitomizes the genre:
But in astonishingly short order, America's shrewdest elder statesmen blazed a best-worst way out of California's economic morass. With a stiff cocktail of budget cuts and hard-won new taxes, Brown has not only zeroed out the deficit, he's also begun paying down the debt. "Jerry Brown's leadership is a rebuttal to the failed policies of Republicans in Washington," says Neera Tanden, president of the Center for American Progress. "California is proving you can have sane tax systems, raise revenues, eliminate structural deficits and have economic growth."
Evidence for 'the California comeback' is based two 'statistics': an (allegedly) falling unemployment rate (still the fifth highest in the country and two points higher than Texas) and an (alleged) budget surplus.

But the media portrayal is a smokescreen.

First things first, the drop in unemployment is the result of a plummeting labor force participation rate:
The difference between a 66 percent rate and a 63 percent rate – three percentage points – translates into 900,000 potential workers, and were they still part of the labor force, it would mean California’s unemployment rate would be more than 13 percent, instead of the current official rate of 9.4 percent.
[Author's note: This piece was written a few months ago, but the premise remains.]

Next up, the Budget Surplus:

  • The new budget will put a wrench in budget transparency by including a provision that will allow local agencies to make their own rules when it comes to the California Public Records Act. Rather than mandate that these agencies respond within ten days, the agencies themselves will now control that process. NBC 7 San Diego, June 16, 2013.
  • The budget shell game continues in Sacramento, where Gov. Jerry Brown and state legislators have heralded their plans to keep more conservative revenue estimates in this year’s budget—only to shift other funding predictions. Those include estimating greater receipts from property taxes ($300 million); lower estimates on implementing the Affordable Care Act ($80 million); and reducing the amount that will be repaid to schools by $650 million. Los Angeles Times, June 11, 2013.
  • California’s “balanced” budget ignores the long-term debt obligations of the state for retirees and for money borrowed for the unemployment insurance fund. Sacramento Bee, June 12, 2013.
  • California has a newfound “surplus” thanks to outrageous budget gimmicks that simply ignore state debt. Rather than making the necessary payments into the state pension fund, California, as well as many other states, skip this step and claim to have a balanced budget. Manhattan Institute: Public Sector Inc., May 30, 2013.
  • California's current budget is attempting to close a major gap in public school funding created by a decade-plus-long practice of delaying funds into the next fiscal year. Charter schools have been disproportionately affected by this scheme, as they have been forced to take out bridge loans, and in turn, incurring larger interest payments. Gov. Jerry Brown's 2013-2014 budget proposes repaying $1.8 billion in deferrals-but from 2009-2011, the state added $6.3 billion in delayed payments. The program began with a $1.1 billion deferrals in 2001-2002. Los Angeles Times, April 16, 2013.
  •  But who needs the truth when there's an agenda to push....

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