Contributor

Ray Haynes

Mr. Haynes is an Assembly member representing Riverside and Temecula. He serves on the Appropriations and Budget Committees. [go to Assembly Member Haynes website at California Assembly]

Who’s Dragging Down Who?
California’s Real Impact
[Ray Haynes] 9/2/03

I think it is important people know what is happening in California government. One in seven people who live in the United States live in California. California constitutes ten per cent of the entire national economy, and it is the fifth (or sixth or seventh or eighth) largest economy in the world (our ranking shrinks each year Davis stays in office). When California’s economy hiccups, it causes a national economic earthquake. A large, diverse, and powerful economic actor is important not just to those of us who live here, but to those who walk the halls of Washington power as well.

Government at any level can’t do much to help the economy. The economy is driven by people’s needs and the endless effort of private companies to meet those needs. Government, however, can screw it up. Using tax and regulatory policy, and government subsidies, government impacts individual preferences by increasing the price of one product or service (or decreasing another), and shifting limited social resources to government-preferred activities. If these preferred activities aren’t beneficial to the economy as a whole, government causes the economy to falter. Jobs are lost, people are hurt, and the economy shrinks. Given these facts, it would be important to cover any government function that affects ten per cent of the economy. Sacramento should be the focus of a lot of media attention.

It is not, however. In fact, it is very difficult to find out what is happening in California state government. So—as a public service—I will help. Do you want to find out what is happening in California’s economy? Go to the website for California’s Department of Finance, and click on their monthly finance bulletins. These bulletins chronicle just what is happening in California’s economy, and how that is affecting our state budget.

Here is what happened during the month of July. Industry employment in California fell by 21,800 jobs. The nation lost 44,000 jobs in July. That means that half of the job losses in this country are due directly to what is happening in California. We are ten per cent of the economy, but we cost this country half of its jobs. Similarly, while all 50 states had some budget problems this year, California’s deficit accounted for about half of the total shortfall nationwide. This is important because many of my Democrat friends, including our current Governor, are claiming that the problems in California are part of a “national” problem. Well, yes, to the extent California is part of the nation, this is a national problem. What is clear from these figures, and the information that you can get from the Department of Finance, California is most of the nation’s problem, and has been for some time.

When Pete Wilson was Governor, and California’s economy was humming right along, my Democrat friends were more than willing to give Bill Clinton the credit for Pete Wilson’s work. Now they want to blame George Bush for the problems they created with the help of Gray Davis.

If California has an economic cold, the nation has an economic flu. If half of the jobs lost in the nation come from California, it is clear there is something wrong in California, not the nation. As President Bush has cut taxes to spur the economy, Governor Davis has raised taxes, and killed California’s economy. As President Bush has cut regulations to make it easier for businesses to grow, Governor Davis has hurt business with new regulations. The problem is that ten per cent of the nation’s economy is dragging. Everybody else is growing. We’re shrinking. As forty nine other states begin to expand, and grow out of the economic malaise that began in December, 2000, California remains stagnant. So just who exactly is dragging down who?