Welcome to California: Soaring unemployment, a burst real estate market, cuts in public service, lack of health care and a frozen political system. Paul Krugman explains why the sunshine state is in worse shape than most:
The seeds of California’s current crisis were planted more than 30
years ago, when voters overwhelmingly passed Proposition 13, a ballot
measure that placed the state’s budget in a straitjacket. Property tax
rates were capped, and homeowners were shielded from increases in their
tax assessments even as the value of their homes rose.
result was a tax system that is both inequitable and unstable. It’s
inequitable because older homeowners often pay far less property tax
than their younger neighbors. It’s unstable because limits on property
taxation have forced California to rely more heavily than other states
on income taxes, which fall steeply during recessions.
important, however, Proposition 13 made it extremely hard to raise
taxes, even in emergencies: no state tax rate may be increased without
a two-thirds majority in both houses of the State Legislature. And this
provision has interacted disastrously with state political trends.
Krugman also warns that this could be the norm rather than the exception thanks to the ingenious Republicans who have decimated the country in order to service the needs of the rich:
The political problems that have plagued California for years are now increasingly apparent at a national level.
be blunt: recent events suggest that the Republican Party has been
driven mad by lack of power. The few remaining moderates have been
defeated, have fled, or are being driven out. What’s left is a party
whose national committee has just passed a resolution solemnly
declaring that Democrats are “dedicated to restructuring American
society along socialist ideals,” and released a video comparing Speaker
of the House Nancy Pelosi to Pussy Galore.
And that party still has 40 senators.