{"id":1747631,"date":"2022-11-22T07:32:27","date_gmt":"2022-11-22T12:32:27","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1747631"},"modified":"2022-11-22T07:32:34","modified_gmt":"2022-11-22T12:32:34","slug":"did-californias-25b-budget-deficit-just-tank-gavin-newsoms-presidential-dreams","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/did-californias-25b-budget-deficit-just-tank-gavin-newsoms-presidential-dreams\/","title":{"rendered":"Did California\u2019s $25B Budget Deficit Just Tank Gavin Newsom\u2019s Presidential Dreams?"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fdid-californias-25b-budget-deficit-just-tank-gavin-newsoms-presidential-dreams%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1747631&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Days after a less-than-disastrous midterm, an unpopular President Joe Biden announced that he intends to run for reelection in 2024. Democrats face a weak and aged bench \u2014 though one Democrat who might play Ted Kennedy to Biden\u2019s Jimmy Carter, California Gov. Gavin Newsom, just saw his narrow path to the White House become even more difficult to navigate as California\u2019s legislative analyst announced that the Golden State was facing a <a href=\"https:\/\/www.kcra.com\/article\/california-faces-25-billion-budget-deficit-states-legislative-analyst-projects\/41982419\" target=\"_blank\" rel=\"noreferrer noopener\">$25 billion budget deficit<\/a>.<\/p>\n<p>Now Newsom will be forced to stay close to California and deal with a budget mess largely of his own making.<\/p>\n<p>How did California, the progressive left\u2019s shining North Star, experience such a rapid budgetary collapse when just a few months ago liberals were crowing about the state\u2019s robust finances \u2014 typically conflating this year\u2019s $100 billion surplus with the health of California\u2019s economy?<\/p>\n<p>There are three main causes for California\u2019s fiscal distress.<\/p>\n<p> Reliant on Taxing Big Earners <\/p>\n<p>First, California has a massive overreliance on high-income earners and corporate startups. For more than a decade, California has had America\u2019s highest marginal income tax rate, <a href=\"https:\/\/taxfoundation.org\/publications\/state-individual-income-tax-rates-and-brackets\/\" target=\"_blank\" rel=\"noreferrer noopener\">13.3 percent<\/a>. This means that when Silicon Valley does well, California\u2019s revenue surges, raking in billions of dollars from the value of stock options, initial public offerings, and capital gains. But the reverse is true as well \u2014 when California\u2019s economy slows, even slightly, revenue plummets. Thus, with Lyft, Meta, Twitter, and others laying off thousands, California\u2019s tax revenue suffers. It all makes for a very volatile revenue stream.<\/p>\n<p>The problem with the big ups and downs in revenue is that Democrats in Sacramento rapidly ramp up spending in the good times, and then, loath to cut spending, rack up deficits in the slow times.<\/p>\n<p> Massive Regulatory Burden <\/p>\n<p>Second, <a href=\"https:\/\/files.taxfoundation.org\/20220406132905\/total-tax-burden-by-state-2022-state-and-local-tax-burdens-2022-state-and-local-taxes.png?_gl=1*y6j80p*_ga*NDA4NzcyNDczLjE2Njg3OTA0ODU.*_ga_FP7KWDV08V*MTY2ODc5MDQ4NS4xLjEuMTY2ODc5MTMxOS40Mi4wLjA.\" target=\"_blank\" rel=\"noreferrer noopener\">California\u2019s high taxes<\/a> (only New York, Connecticut, Hawaii, and Vermont have a greater state and local tax burden), <a href=\"https:\/\/www.fraserinstitute.org\/economic-freedom\/map?geozone=na&#038;page=map&#038;year=2020&#038;selectedCountry=USA\" target=\"_blank\" rel=\"noreferrer noopener\">heavy regulatory burden<\/a> (second-worst in the nation), and <a href=\"https:\/\/instituteforlegalreform.com\/2019-lawsuit-climate-survey\/\" target=\"_blank\" rel=\"noreferrer noopener\">bad lawsuit climate<\/a> (third-worst) make the state hard on business, especially on entrepreneurs who can\u2019t absorb the increasingly high costs of regulatory compliance. Add to that the state\u2019s high cost of living (<a href=\"https:\/\/meric.mo.gov\/data\/cost-living-data-series\" target=\"_blank\" rel=\"noreferrer noopener\">the third-highest behind Hawaii and Massachusetts<\/a>), rampant <a href=\"https:\/\/worldpopulationreview.com\/state-rankings\/homeless-population-by-state\" target=\"_blank\" rel=\"noreferrer noopener\">homelessness<\/a>, the <a href=\"https:\/\/www.census.gov\/content\/dam\/Census\/library\/publications\/2022\/demo\/p60-277.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">highest poverty rate in the nation<\/a> since 2009 (when accounting for the cost of living), and the <a href=\"https:\/\/www.eia.gov\/electricity\/state\/\" target=\"_blank\" rel=\"noreferrer noopener\">highest electricity prices<\/a> in the continental U.S., and California becomes even less attractive. In addition, California, as with other blue states and cities, responded to Covid-19 by trying to emulate China \u2014 opting for extensive shutdowns of businesses and schools. <\/p>\n<p>If all those negatives aren\u2019t difficult enough to deal with, the state\u2019s aggressive cancel culture has added a layer of repression, forcing people with unpopular opinions to be quiet or risk harassment. As a result, <a href=\"https:\/\/www.ppic.org\/blog\/the-politics-of-leaving-california\/\" target=\"_blank\" rel=\"noreferrer noopener\">many just decide to move out<\/a>, taking their taxable income and businesses with them.<\/p>\n<p> Increased Medicaid Costs <\/p>\n<p>Third, California has gone all-in on Medicaid expansion (called Medi-Cal). In 2005, my first year on the Budget Committee and the Revenue and Taxation Committee in the California State Assembly, <a href=\"https:\/\/www.chcf.org\/wp-content\/uploads\/2017\/12\/PDF-MediCalBudgetCostDrivers.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Medi-Cal absorbed 14 percent of<\/p>\n<p><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>California Gov. Gavin Newsom just saw his path to the White House become even more difficult as a $25 billion budget deficit was announced.<\/p>\n","protected":false},"author":563,"featured_media":1747634,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[546],"tags":[],"class_list":["post-1747631","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-federalist"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1747631","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/563"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1747631"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1747631\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1747634"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1747631"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1747631"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1747631"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}