California Faces Fiscal Free-for-All If Gavin Newsom Wins

October 26, 2018 Updated: October 31, 2018

Are you a Democrat running for office, or already in office, like California’s Gavin Newsom? Then you better be ready to outbid your Democrat competition for attention. As for the rest of us, there will be no fiscal sanctuary.

California alone is one of the largest economies in the world. At the state level, it is also a one-party state. Democrats have run the legislature for decades and hold all of the state-wide offices, both U.S. Senate seats, and 39 of the 53 House seats. Such dominance frees all of those Democrats from fiscal rationality.

As I have written elsewhere, California is fiscally unsustainable. According to a recent analysis, California has an infrastructure deficit of over $750 billion. The Hoover Institute says there is a trillion-dollar unfunded pension liability, and total debt is more than $1 trillion, according to CaliforniaPolicyCenter.org, and likely is growing.

You would think that would cause a Democrat politician to consider being cautious about increased spending—but you would be wrong. Dead wrong. That is so Jerry Brown-like. Yes, Brown is shortly to be considered cautious by modern-day California Democrat standards.

You see, to get ahead in today’s Democrat Party, you have to speak the loudest and offer the most. For instance, take poor California Sen. Kamala Harris who is running for president.

She offered a Senate bill that would provide a monthly tax credit of $500 for families. That equates to $6,000 a year. A pittance really. A Christmas scrooge in comparison to New Jersey Sen. Corey Booker. He wants to offer up $50,000 per child. He, too, is running for president.

Newsom’s Ambitions

All of which brings us to Newsom. He is running for president. Oh sure, he is running for California governor first—but that is just a transfer station on his high-speed political train the presidency.

If Newsom wins his race for governor, it is doubtful he will run for president in 2020. He will wait until 2024—assuming President Donald Trump vanquishes the gigantic field of Democrats looking to run against him in 2020. Indeed, Newsom would be happy if Trump won in 2020 because that would mean Harris, Booker, Hillary Clinton, and the rest had lost. In today’s fast-moving political world, that would make them yesterday’s story.

Newsom wants to be today’s and tomorrow’s story. So, how can he do that?

First, by attacking Trump daily. That is a rite of passage among Democrats and considered an accomplishment among Democrats in California. Second, he must outbid his potential Democrat opponents today and tomorrow.

That more than implies fiscal danger for Californians.

As for the bidding, recall that Newsom went big on gay marriage by pushing it as mayor of San Francisco in defiance of state law. Now it’s the law of the country. Score a major victory for Newsom in the eyes of the left.

Next, California has a boondoggle of a high-speed rail project moving along at a snail’s pace due to government incompetence and lack of funding. Newsom was against it before he was for it. Running for California governor has a way of making you an even bigger spender though. That train represents a potential $100 billion bill to come.

Newsom is also big on government health care. He imposed a large government health care program on San Francisco and now wants it for all of California—including those there illegally. How much will that cost? Estimates range up to $400 billion! That is twice the size of the existing state budget. This is Newsom’s largest goal—he wants to be the democrat that instituted single-payer health care, i.e. socialized medicine.

Paying the Bill

How would Newsom arrange for government to pay that?

The end of California’s legendary Prop 13—that’s how.

Prop 13 limited property taxes increases each year by no more than 2 percent a year and served as a model for many states. On the 2020 ballot, however, there will be an initiative to strip commercial property of Prop 13 protection.

Newsom will fight for that. If he is successful in cutting Prop 13 in half in 2020, then it will be on to eliminating Prop 13 protection for residential homes. The left is already branding Prop 13 as racist by saying it is protecting older whites at the expense of the less-white poor.

In the short run, that could yield a lot of tax money as well a new service tax, an increased income tax, an increased sales tax and eventually an asset tax that will be implemented by the Democrats at some point. Beyond that, existing state bondholders will take a haircut when those bonds are eventually renegotiated to help the state’s coming cash flow problems.

As for the existing more that $1 trillion debt? Ask yourself, how will it ever be paid?

In the long run, it will mean the already over-taxed California will have killed its golden goose. Indeed, some on the left are okay with that because they say it will reduce property values and make them more affordable to the poor (Oh, don’t bother telling them it will mean incomes will have dropped too—they are immune from such bothersome things as economics).

All of that is unimportant to Newsom as well. He’s on a mission. He has to outbid the other Democrats running for president. If he wins the governorship of California, he will be in a position to do just that—and the fiscal sanity of California will be damned.

Thomas Del Beccaro is the author of “The Divided Era” and former chairman of the California Republican Party.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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