Elon Musk just gave California’s Democrat Gov. Gavin Newsom some welcome good news as Musk announced Tesla will build its engineering headquarters in Palo Alto—in the heart of the Silicon Valley.
Newsom, expected by political analysts to be maneuvering to run for the Democrat nomination for president, has been beset by a string of setbacks (more on those later). Musk’s partial swing back to California helps Newsom project the image he desperately wants: Just as California is the future of America, Newsom is the future of the Democrat Party.
California has been a land of contrasts since the gold rush attracted hoards seeking fortune in the hills, while the merchants of San Francisco waxed rich selling them overpriced shovels.
California’s early opulence is evident in its gilt-lined state capitol with its intricate stonework. Today, those who work in that capitol, representing the interests of 39 million people, a number down over three years from its peak of 39.6 million, are an increasingly isolated elite, loosely guiding a vast and powerful unelected bureaucracy that sees nothing as too insignificant to regulate or proscribe.
GAVIN NEWSOM PREDICTED MASSIVE BUDGET DEFICIT FOR CALIFORNIA. REALITY WAS EVEN WORSE, ANALYSIS FINDS
The result looks increasingly like an "Elysium" on earth, with wealthy enclaves of the beautiful people surrounded by masses struggling to get by.
California has America’s highest supplemental poverty rate, 13.2 percent, meaning 5.1 million live in poverty in the Golden State.
With just under 12 percent of the nation’s population, California has 34 percent of America’s welfare caseload.
Fully half of homeless Americans (117,000 of 234,000) who chronically live on the street suffering from mental illness or drug abuse call California home.
Meanwhile, California’s energy costs have soared under a regime of intentional scarcity designed to reduce greenhouse gas emissions—California’s electricity prices trail only Hawaii’s. Likewise, its gas prices are the highest outside of Hawaii, and both elected and unelected policymakers are pushing for the abolition of the internal combustion engine and natural gas-powered appliances, with crushing added cost implications for those least able to afford it.
And even with the high electricity prices, California has increasingly struggled with power blackouts as money that should have gone into basic infrastructure and powerline maintenance has instead been diverted to wind, solar, and battery projects—much of it made in China.
California’s state and local tax burden is the fifth highest in the nation, consuming 13.5 percent of the state’s economic output—all those regulators and government employees need to be paid, after all. As a share of the state economy, California government takes almost 21 percent more than the national average and about 60% than does Texas—the state to which a plurality of the California exodus migrates to.
With all that tax money California collects, you’d think its residents would enjoy great roads and a strong public education system—but California’s thoroughfares rank the nation’s fourth worst due to a big backlog of deferred maintenance while their K-12 public school results are barely better, ranking 40th of 50.
And, due in part to California’s heavy regulatory burden, residents pay the third-highest cost of living in the nation, after Hawaii and Massachusetts.
Since 2001, California has lost more residents to other states than people moving into California. But natural growth and international migration, both legal and illegal, kept California growing, though as a slow pace.
CLICK HERE TO GET THE OPINION NEWSLETTER
Even so, California’s elite would console themselves with the fact that it was only the working and middle classes who were moving out (on net). California was still a magnet for the rich and smart. But this ceased being true about eight years ago. Since 2016, California has also lost upper income residents to other states. And with the nation’s highest marginal individual income tax rate at 13.3 percent, it’s not any wonder.
All of this has led to a stunning reversal in the state government’s literal fortunes, with California’s budget swinging from a massive $100 billion surplus last year to a deficit of $22.5 as announced by Gov. Newsom in January. But now, the California Legislative Analyst’s Office, broke the bad news that the projected deficit grew by another $7 billion.
Gov. Newsom must issue a revised budget in May—one that will be filled with painful cuts and tax increases. If Newsom remains true to form, during the lead up to his budget release, look for him to issue a drumbeat of accusations against the imagined culprits for the state’s troubles: Big Oil, Republicans, and greedy billionaires who don’t pay their fair share.
For hundreds of thousands of Californians moving out of the state every year now, Newsom’s whiny blamecasting may be the last thing they hear as they cross the border heading east.
