Another budget shortfall already?!

The L.A. Times reports that California budget faces new $8-billion shortfall:

Reporting from Sacramento -- The plan that Gov. Arnold Schwarzenegger and lawmakers approved last month to fill California's giant budget hole has already fallen out of balance with a projected $8-billion shortfall, the Legislature's nonpartisan budget analyst said Friday.

After analyzing recent data showing rapidly rising unemployment and lower-than-expected economic growth, Legislative Analyst Mac Taylor said the state is on track to have even less money than lawmakers anticipated in February.

State leaders said then that they had ended the financial crisis through $42 billion in lowered spending, increased taxes, borrowing and accounting shifts.

California's economy in is such bad shape that Taylor's office anticipates that residents' combined personal income will be lower this year than it was last year, leading to fewer tax dollars for state coffers.

"I went as far back as 1950, and I could not find a situation in which personal income had actually declined in the state, so that's a rather unusual event," Taylor said at a news conference Friday.

This is absolutely ridiculous. You want to know why? Because someone like me -- a person with no formal background in economics, accounting or finance; no political experience or special insight into the government or state budget; who spends a minimal amount of time reading the news -- was able to clearly see this budget shortfall coming! I mentioned specifically in the previous posts, California Legislators are Braindead and Insurrection?, that the government would pass a budget only to find that the expected revenues from tax hike increases wouldn't meet projections. How is it that a layperson could see this coming but the entire state legislature and governor's office with all of their so-called experts couldn't?

Our government has lost sight of it's true purpose of protecting our freedom. A book I'm reading by Naomi Wolf entitled, Give Me Liberty, explains that Thomas Jefferson's primary point in the Declaration of Independence was that not only is it our right, but it is our duty as citizens to throw off government that is so blatantly violating the liberty of it's citizens. Each year, our government usurps more tyrannical power in the name of "promising" more benefits. The reality is that the government does not produce anything and everything they promise has to be taken from the backs of those who work in the private sector. As the government takes more, it leaves less for those who produce causing greater dependence on the government which in turn causes less production and greater poverty. History shows that entitlement spending is a vicious, never-ending, downward spiral that can only end in the abolishment of those programs or government bankruptcy (or massive inflation at the federal level) which will lead to widespread poverty and violent revolution. While I hope for the former, it's looking like the latter will be the outcome.

Drought and unemployment woes

Drought Emergency Declared in California

The USA Today reported in a brief article about the declared emergency Californians face with respect to the drought we are in:

California is suffering its third-straight dry winter, so Gov. Arnold Schwarzenegger has declared a state of emergency to begin additional water-conservation measures.

"This is a crisis, just as severe as an earthquake or raging wildfire, and we must treat it with the same urgency by upgrading California's water infrastructure to ensure a clean and reliable water supply for our growing state," the governor said in a statement issued this afternoon to The Associated Press.

Normal precipitation is down 25%, and the state's reservoirs are at their lowest levels since 1992. Before today, at least 25 water agencies had imposed mandatory restrictions and 66 others had voluntary measures in place. Last June, Schwarzenegger declared a statewide drought but not a state of emergency.

California Unemployment reaches 10.1%

The L.A. Times reports that California unemployment rate reaches 10.1%:

Lackluster spending on clothes, cars, legal services and most everything else has left California's economy listless, just about guaranteeing that the state's 10.1% unemployment in January will march upward until at least the end of the year, economists predicted.

The Golden State lost 79,300 payroll jobs in January, pushing the monthly unemployment rate to its highest level since June 1983, when the country was starting to recover from a deep recession.

Job losses in January escalated across all industries -- including, notably, motion picture and sound recording -- with the state's unemployment rate jumping 1.4 percentage points from a revised 8.7% for December.

Unfortunately, California still is falling into what appears to be a crippling downturn, said Howard Roth, chief economist at the state Department of Finance.

"There's very little demand out there," he said. "Certainly consumers are depressed, and businesses aren't going to buy as long as consumers aren't buying."

The stagnation was even more pervasive in Los Angeles County, where unemployment rose from 9.2% in December to 10.5%, almost twice the rate recorded in January 2008.

All areas of the local economy declined in January compared with the previous month, with motion picture and sound recording losing 22,300 jobs, retail trade 15,100, educational and health services 7,000 and leisure and hospitality 4,100.

Layoffs by large California employers, which must be reported to government agencies, accounted for nearly 1 out of every 4 so-called mass layoffs nationwide, the U.S. Department of Labor said this week.

According to state filings, the layoffs affected all areas of the economy. Financial giant JPMorgan Chase listed more than 1,000 at locations in both Northern and Southern California.

No one is safe, said Esther Surjanto, who last month lost her job as an order clerk at a Los Angeles garment plant.

"We have no time to pity party," she said. "Even the big, dream companies where you'd like to work are laying people off."

"California is hemorrhaging faster than the U.S. economy," said Sung Won Sohn, an economist at Cal State Channel Islands. California consistently has ranked among a handful of states with the country's highest unemployment.

The jobs picture here is likely to keep deteriorating because the state no longer can assume that education and health services will generate new jobs, Sohn warned. "Given the budget crisis we're having, I don't think we can count on government to prop up the economy either,"

New data on the national economy's performance, also released Friday, affirmed Sohn's grim assessment. The Commerce Department reported that the economy contracted at an annualized rate of 6.2% in the last quarter of 2008, the most severe slowdown in 26 years.

"The road to full economic recovery will not be short," Gov. Arnold Schwarzenegger cautioned. He said the state was counting on President Obama's stimulus package and more modest efforts on the state level to set the stage for new job growth.

But at least some of the positive effect of the $787-billion stimulus program could be lost to California now that the state has raised taxes by $12.5 billion as part of a deal to close a $441-billion budget deficit, economist Esmael Adibi of Chapman University in Orange said.

"I don't expect as much stimulus as there could have been," he said. "After the budget passed, I became more pessimistic about the outlook for job creation here."

Although stimulus spending on highways, levees and other public works could eventually lead to more hiring, the economy here won't begin to turn around until "housing finds its bottom," said Russ DeVol, director of regional economics for the Milken Institute in Santa Monica. The odds of that happening this year diminish with each onslaught of bad news, he said.

The state's economic decline is sweeping, making the recession the "worst in the postwar period," DeVol said.

What everybody needs to understand is that unemployment lags the economy. What this means is that even after the economy starts to get better, employment doesn't start to pick up until months afterwards. The worst unemployment figures are after recessions have ended and have already started back on their path to growth. It's very important to recognize that we are nowhere near the end of this economic crisis so unemployment is only going to get much worse and could reach 15% or more! I think we'll be very lucky in California if we start to see job growth by 2011.

Overhaul government? For what purpose?

A recent L.A. Times article, Dysfunctional California government needs major parts replaced, urges an overhaul of our state government. The first part of the article supports a spending cap that will be open for voters to decide on this upcoming election:

Voters can get started at a May 19 special election by buying a spending cap.

The cap -- Proposition 1A -- was the most vital part of a deal that won enough Republican support last week to pass a $42-billion deficit-reduction package, including a $12.5-billion tax increase.

A spending cap has long been needed in the Capitol to enforce fiscal discipline -- to keep politicians from launching expensive new programs in boom times and being unable to afford them when the economy goes bust.

Here's how it would work:

Starting in 2011, 3% of general fund revenue would be placed in a rainy day fund each year. After the kitty equaled 12.5% of the general fund, withdrawals could be made to pay off debt or finance one-time infrastructure projects.

Spending growth would be capped at a percentage based on the previous 10-year revenue trend.

Any excess revenue would be stored in the rainy day fund. It could be dipped into to finance current service levels, but not to increase spending beyond inflation and population growth.

I happen to think a spending cap along with a mandatory savings plan would be a great idea. It's just common-sense, prudent financial management. When handling money that has been garnered mostly by confiscation, the greatest care should be made to ensure it is spent wisely and properly.

The author continues to offer advice in his article on fiscal control:

I'd add two more parts to this fiscal control:

Any tax cut would be temporary -- "sunsetted" -- and subject to periodic renewal. As with excessive spending, the state shouldn't be stuck with a permanent tax cut as revenue falls and a deficit looms.

I'd also require any ballot measure that forces new spending to identify the source of needed revenue. "The general fund" is not an acceptable answer.

In my opinion, temporary tax cuts mean permanent tax increases which really means permanent spending increases. Has a government program ever given money back because they didn't need it? Never. If they did, then they would never get it again if they really did need it. In effect, government punishes thrift and rewards waste. There is a good reason that it requires a 2/3 majority to raise taxes -- to restrain and limit goverment spending. Making any tax cut a temporary one is a horrible idea.

His second notion -- forcing the identification of revenue sources -- is one that you would think wouldn't even have to be mentioned. Why would the government ever think it could spend money when it wasn't sure that it had it? Everybody should be frustrated and angry that our government manages our money so horribly. Not only is it sound financial management to only spend what you know you have, but justice demands it. For example, it is only fair and right that the money spent on the drivers license division be paid for by those who get drivers licenses. The same goes for those who drive on the roads, use the beaches, etc. If government followed the principles of liberty and justice, it would virtually never find itself in a fiscal crisis like the one California is in.

The author then talks about another big proposal:

A reform group headed by former Democratic Sen. Steve Peace of El Cajon crafted the measure. Peace had a "top two" initiative ready to roll. But, at the request of Senate leader Darrell Steinberg (D-Sacramento), he gave it to the Legislature to lure the tax-hike vote of Sen. Abel Maldonado (R-Santa Maria).

Under the proposal -- strongly supported by Schwarzenegger -- all candidates for state and congressional office would compete on the same ballot. They could identify themselves by party. But voters could vote for any one they wanted. The top two vote-getters, regardless of party, would advance to the general election. Presidential candidates still would run in partisan primaries.

The goal is to elect more pragmatic officeholders -- not necessarily more Democrats or Republicans -- by rewarding candidates who appeal to a wide political spectrum rather than just the rigid right or hard left. Redistricting reform, approved by voters in November, also should help when it takes effect in 2012.

I'm undecided about this proposal. Proponents claim, in part, that it would be friendly towards third party candidates. Opponents claim that it would it would be friendly towards Democrats. Others say that it would be bad for political parties in general. Sometimes the effect of legislation like this can only be understood after having given it a shot. Right now, I'm for change. I think I would be for something like this if it also included stricter term limits and a grandfather clause that would necessitate voter reapproval after a period of time, say 12 years.

The article mentiones something about this proposal however that really bothers me:

The goal is to elect more pragmatic officeholders -- not necessarily more Democrats or Republicans -- by rewarding candidates who appeal to a wide political spectrum rather than just the rigid right or hard left. Redistricting reform, approved by voters in November, also should help when it takes effect in 2012.

Peace says closed primaries foment campaigns "that increase polarization, actually polluting the goodwill of the population. . . .

"The business of democracy is to find a point of agreement, to compromise. And our current system, after 50 years of manipulation by Democrats and Republicans, makes it difficult for politicians to compromise. What an open primary does is change the game so people who pursue practical mediation of differences are more likely to survive the political process."

Let's get one thing clear; we do NOT live in a democracy (even though we're headed that way), we live in a democratic republic. There is a huge difference between the two. A democracy is nothing short of tyranny where the majority can do whatever it wants. On multiple occasions, our founding fathers preached against the evils of democracy. They founded a democratic republic specifically limiting those in power. Thomas Jefferson once said, "In questions of power, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution." So the business of government is NOT to compromise or find agreemet but to protect liberty and establish justice. With all of the entitlement spending, government corruption, and even notions of doing what is in the interest of the greater good, we seem to have lost sight of protecting liberty and the establishment of justice. Charity never came by force and whenever the government institutes so called "charitable programs", they are wasteful, ineffective and tyrannical, enacted, at least in part, by motives of power and ideology rather than the love of freedom.

The author finishes by recommending additional changes:

The state's sputtering engine also needs several other new parts, including:

* A more user-friendly process of budgeting -- users being the legislators. Almost all have become bystanders in recent years as budgets are negotiated secretly between their four leaders and the governor, the so-called Big Five. This creates legislative bitterness and can exacerbate gridlock. It also keeps the public in the dark.

The Legislature should return to meaningful decision-making in budget committees and on house floors and to compromising in conference committees.

That seems to be wise.

* Longer term limits. These current ones have been a disaster. Besides purging knowledge and experience, they discourage long-range planning by insecure legislators whose short-term focus is on winning their next political job.

I completely disagree with this. We don't need career politicians. The notion that knowledge and experience is lost is true to a certain degree but keep in mind that the average tenure of a CEO nowadays is 5 years. How much "knowledge and experience" is really lost when a legislator loses office? We would never dream of allowing a governor or President (an office which requires much more knowledge and experience than that of legislator) the ability to stay in office 18 years. Our legislators don't need to be in office longer than 12 years at the most. Don't we want a fresh approach to government?

Also, long term politicians have to focus on winning their next political job just the same as short-term politicians so how would term limits help? As a matter of fact, in my opinion, career politicians probably have more to lose and therefore would worry about it more. The only thing that prevents this so-called worry is gerrymandering districts and has nothing to do with term-limits. Politicians SHOULD worry about their jobs. However, they should worry about what the people think, not powerful unions and lobby groups. THOSE are the real threat to individual liberty and justice.

* A more stable tax structure that's less dependent on volatile income fluctuations of the rich. An independent commission formed by Schwarzenegger and Assembly Speaker Karen Bass (D-Los Angeles) soon will recommend a fix.

As mentioned earlier, a system where government spending is completely paid for by those who use the service would nullify the need to worry about whether or not to tax the rich more. It's unbelievable that after having gone through so much (the revolutionary war, the civil war, the civil rights movement, etc.) to obtain freedom, we still think we have the right to treat people in some sort of reverse class system where the government treats people differently depending on how rich or poor they are. Doesn't the phrase "liberty and justice for all" mean anything?

* A simple majority vote for budget passage; 55% at most. Scrap the two-thirds vote requirement.

The people's confiscated tax dollars should be treated with the utmost respect by our legislators. I like the idea that 2/3 of them have to be in agreement.

One thing the article failed to mention is the disaster that California's direct democracy has reaped on this state. I'm not saying that good things haven't been accomplished as well. However, as I mentioned in Property tax revenue plummets, I don't think the majority has the ability to have as intimate of an understanding as is necessary to make properly informed decisions about complex budget decisions. In many cases, the propositions put on ballots are there specifically because powerful interest groups wanted to bypass the legislative or executive branch by going straight to the public. The reality is that most of us don't have the time, means or motivation to understand the complexities of these special interest groups. So the interest groups attempt to buy favorable legislation by using T.V. advertisements to influence enough of the majority to get their way. The reality is that our form of direct democracy needs to be overhauled as well.

More signs of decline even while budget crisis postponed

Signs of decline

The USA Today reports about the state of California in an article titled In California's meltdown, misery has long reach. Here's an excerpt:

Signs of decline abound, from potholed streets to public school classrooms that are among the nation's most crowded, to neighborhoods emptied of residents by the mortgage foreclosure crisis. Median home values in Southern California dropped 35% in the past year, and California has the lowest S&P bond rating of all 50 states.

Gov. Arnold Schwarzenegger has proposed chopping the school year by five days, to give California one of the shortest school years in the nation.

California's troubles have been fueled by an influx of illegal immigrants who place increasing demands on social services. They have helped to boost the state's overall population even as it loses thousands of residents who are leaving for other states.

In each of four years prior to June 2008, more people left California than moved in from other states, a reversal of a decades-long trend in which the state took in more than it lost.

The U.S. Census reports that California's population rose despite the population outflow, from 34 million in 2000 to 37 million in 2008, because of an increase in births and foreign immigration, legal and illegal.

Those leaving point to an unemployment rate that hit 9.3% in December, up from 5.9% a year earlier and fourth-highest in the nation, and taxes on income, sales and gas that are among the highest in the nation.

The exodus is enough that California could lose one of its 53 seats in the U.S. House of Representatives in the redistricting that will be based on the 2010 Census.

The budget crisis

The budget crisis is still there but has been delayed by legislation that has finally passed. From the little reading I've done, it appears one legislator was finally persuaded to vote for it after legislation was included which would add a proposition to next election's ballot to change the way legislators are elected. I hope to write a post soon, once I have more time and after I've done more reading, with more thoughts on the budget crisis.

L.A. Times rebuttal

Many of the news sources that I use are prominently featuring an article by the L.A. Times, written by George Skelton, called California's GOP lawmakers should do the budget math. I've actually read it a couple of times and this guy has no clue what he is talking about. Rarely do I take an article and tear it down piece by piece but this one was so stupid and yet so prominent that I felt I had to. In addition, this is being displayed as "news" by the many sources that I frequent. It's clearly a biased opinion piece blasting one of the two political parties. It simply isn't "news".

First off, he starts by saying the following:

The math seems pretty simple. But apparently it's too rigorous for many Republican politicians.

To avoid raising taxes and still balance the books in Sacramento, you'd have to virtually shut down state government.

One vote shy, state budget still in...Some politicians are in denial. Some are demagoguing. Some are just ducking. Scared.

The scared are rather pathetic. Here are elected officeholders who represent 475,000 people in an average Assembly district -- 950,000 in a Senate district -- and they cower before conservative bloggers, radio talk entertainers and activists of a declining party.

Now I don't pretend to know why individual legislators vote the way they do. And I don't hesitate in calling them, as a whole, stupid for some of the decisions coming out of Sacramento. But it's just downright arrogant of this author to pretend he knows the motivation of each one of the politicans -- that they are doing what they are doing because they are scared, in denial, or too stupid to understand math. Maybe the author could've paused for a minute and thought that maybe they are doing what they are doing out of principle! Maybe they ran on a platform of not raising taxes and are keeping their promises! Maybe not... but at least he could've entertained the idea in this "news" article.

He goes on to say:

It's Republican dogma in the Capitol that to vote for a tax increase is "career-ending." Even if true -- and there's evidence both ways -- so what?

These are folks, after all, who sermonize against making politics a career, publicly pretend to worship term limits and preach the virtues of private enterprise. You'd think they'd be eager to return to the private sector. Yet, they're afraid to risk losing out on their next political job.

Scared is a symptom of term limits, when legislators aren't around long enough to gather political self-confidence and standing; of gerrymandering that bunches like-minded voters into single districts to protect seats for a party and punishes bipartisanship (Proposition 11, passed in November, should change that starting in 2012), and closed primaries that deny access to a broad ideological base of voters. But all that's for another day. Back to the math.

Now do you see how the author is very clever in not only failing to mention any alternative to the so-called "scared" motivations of GOP lawmakers, but he then reinforces that notion by explaining why they are scared. "Journalists" do this thing all of the time. Instead of reporting all sides, they report just one side (their own) and then talk about it as if its fact so there is never any reason for debate. He doesn't offer up any sort of debate about the notion that term limits could actually have the opposite effect or that gerrymandering ensures that a politician doesn't need to be scared.

He continues:

The numbers kept flashing in my mind during the weekend as the Legislature -- at least most of it -- labored to win over three Republican votes in each house so it could attain the two-thirds majority needed to prevent state government from falling irretrievably into the dumpster.

The basics: The state has a projected $41-billion deficit through June 30, 2010. It's almost out of cash. Bills are not getting paid. Tax refunds aren't being mailed. Construction work is stopped. Bonds can't be sold.

Gov. Arnold Schwarzenegger and the four legislative leaders finally agreed last week on a package of $15.1 billion in spending reductions, $14.4 billion in tax increases and $11.4 billion in borrowing.

That's close to what Californians want -- a mix. A statewide survey last month by the nonpartisan Public Policy Institute of California found that 56% of voters favor both spending cuts and tax increases to solve what 82% of the electorate considers "a big problem."

The problem for GOP politicians, however, is that 52% of Republicans favor eradicating the red ink "mostly through spending cuts."

Somehow 56% means "Californians". It doesn't mean, "some Californians" or the "majority of Californians", it means "Californians". Do you see the arrogance of this author as he paints a picture of what we want to fit his own opinion? And the moron then contradicts himself in the next sentence by saying that 52% of Republicans don't favor a mix. You can't have it both ways!

He goes on:

But the numbers don't add up. The Legislature's two Republican leaders -- Assemblyman Mike Villines of Clovis and Sen. Dave Cogdill of Modesto -- came to that realization in December as they dug through the budget books. They also knew that even if it were possible to avoid tax hikes, their GOP colleagues didn't have the stomach for the kinds of slashing that would be needed in school, healthcare and prison programs.

"The only alternative now," Villines said Saturday, "is to literally go insolvent and over the cliff. And many of us believe that is irresponsible and giving up our constitutional responsibilities."

Ardent anti-taxers say the governor and Legislature should simply whack the "bloated" bureaucracy by 10%. Even 20% if need be. Lay off and cut pay. Pare benefits too. After all, private companies are doing it.

Well, you could fire every state worker under the governor's control and the savings wouldn't come close to balancing the budget.

According to the state budget document, there is the equivalent of 205,000 full-time jobs controlled by the governor. There actually are more workers than that because some are part-time. Do the math based on 16 months, since that's now the time frame of the projected deficit, assuming a balanced-budget package could be implemented by March 1.

You could lay off all those state workers -- rid yourself of their pay and benefits -- and save only $24.4 billion.

Meanwhile, you would have dumped 160,000 convicted felons onto the streets because all the prisons were closed after the guards and wardens were fired. There'd be no Highway Patrol because all the officers were canned. State parks would be closed because there were no fee-collectors or rangers.

Truth is the savings wouldn't even add up to $24.4 billion because some of those employees are paid out of small special funds that are self-sustaining. It's the big general fund that suffers the deficit. But let's say the books could be shuffled mysteriously and all that savings realized. You'd still need a lot more.

OK, lose the Legislature, you say. It's good for nothing. But it's also not worth much when you're trying to fill that size deficit hole. The Legislature's 16-month cost is roughly $400 million.

So now one branch of government is critically wounded, and another is dead. And we're still $16 billion short of enough savings.

What many people don't realize is that around three-fourths of the state's general fund flows out to schools and local governments, much of it because of voter-passed laws.

The last paragraph finally starts to make sense. Most people don't realize that the method of funding local programs has to come from the state. They also don't realize that California's form of government, direct democracy, which allows for the people to pass pretty much whatever they want with the knowledge gained from a few commercials, is one of the reasons that we are in this mess. This next part is where the author really makes sense even though he doesn't know it:

But there is another place to look for savings: You could cut off all state money to higher education -- the two university systems and the community colleges. That would save the remaining $16 billion.

Don't like any of the above -- all those firings and slamming college doors on kids?

Instead, you could eliminate virtually all state money for healthcare and social services -- grants for the aged, blind and disabled, assistance for the homebound, medical care for the poor, mental health treatment, welfare. . . . No exceptions.

Of course, you'd then be turning away tons of money from Washington, which shares the costs. And you would be violating some federal laws. But there, it's done. You've avoided a tax increase. What a state!

Hopefully, enough Republican lawmakers will courageously follow their leaders and do the math.

Cut all entitlement spending? What?! No way, what a concept! The fact is, entitlement spending is immoral; it's against the Constitution and every notion of freedom and liberty our forefathers fought for; it's nothing more than "legalized" theft; and the fact that the government wields this power only goes to show their ability to usurp and that their true nature is tyrannical.

California legislators are brain dead

A Bloomberg article reports California Budget One Vote Short, Legislature Debates Overnight:

Feb. 15 (Bloomberg) -- California’s Senate halted a middle- of-the-night vote on a $40 billion package of tax increases, spending cuts and borrowing aimed at a closing a record deficit, after the plan fell one vote short needed for passage.

Senate Democrats used a procedural motion to suspend balloting while Republican Governor Arnold Schwarzenegger and Senate leaders worked behind closed doors to secure an additional Republican approval. Lawmakers remain in a session that began last evening. Members of the Assembly are locked in the chamber and told they can’t leave.

“It’s counter-intuitive to think that you can solve this budget problem in this economy with tax increases,” said Senator Dave Cox, a Sacramento-area Republican who Democrats had counted on to vote for the package. Democrats control both legislative chambers.

The legislative package includes plans to raise the state sales-tax rate to 8.25 percent from 7.25 percent; boost vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile; add 12 cents to the per-gallon gasoline tax; reduce the dependant-care tax credit to $100 from $300 and impose a surcharge on income taxes of up to 5 percent.

Our legislators are brain dead. Why? Because what they are counting on is that the revenues from the increases in sales-tax, vehicle licensing fees and the gasoline tax will live up to their projections. However, those projections are based upon current economic activity and unfortunately, California's economy is a sinking ship as almost every previous post I've written has shown. Here is what I wrote in the previous post titled "Insurrection?":

Here is what is going to happen in California. The legislators will propose a solution. It will be unliked by everybody but accepted because we are in such dire straights. As the year progresses, the economy will continue to get much worse here. Housing will continue to fall. Mortgages will continue to reset. Foreclosures will continue to increase. Unemployement numbers will climb. And then, the burdens of entitlement programs will again become too heavy and the government will be facing the same thing they are facing now but even worse. That's when people will really get pissed off.

I still think that is what will happen. I think this budget "solution" is evidence of it. This isn't a prediction per se, it's just my belief. At the very least, we should be getting ready for that scenario. Until the state and federal governments return to a true solution of liberty -- ridding themselves of all entitlement spending -- the end result of widespread poverty will be the result.

Insurrection?

The Trumpet reports that Insurrection Looms in California:

In what amounts to a Boston Tea Party-type rebellion against the government, California counties are threatening to withhold their money. Constitutional officers are also refusing to accept Gov. Arnold Schwarzenegger’s authority to furlough workers. Meanwhile, two more California banks failed over the weekend, and a judge ordered the state to release up to 37 percent of its prison population. What is ahead for California?

Los Angeles, Sacramento, Orange, Colusa, Riverside, Imperial and San Bernardino counties may be on the verge of insurrection.

Several counties “say they’ve had enough—and they aren’t going to take it anymore,” reports the Sacramento Bee. Plans to withhold money, levy lawsuits against the state, and refuse to provide state-mandated services are in the works, and in some cases are already being implemented.

This isn't going to get better until we affect some very serious change here in California. And special interests are too entrenched to let that happen.

Here is what is going to happen in California. The legislators will propose a solution. It will be unliked by everybody but accepted because we are in such dire straights. As the year progresses, the economy will continue to get much worse here. Housing will continue to fall. Mortgages will continue to reset. Foreclosures will continue to increase. Unemployement numbers will climb. And then, the burdens of entitlement programs will again become too heavy and the government will be facing the same thing they are facing now but even worse. That's when people will really get pissed off. Let me finish by quoting the last few paragraphs of the article:

In other news, two more failed banks in California have been seized by regulators. Alliance Bank of Culver City and County Bank, Merced, were the 33rd and 34th banks to be taken over by the Federal Deposit Insurance Corporation since the recession began. Nine banks have been allowed to fail so far this year.

The state is also suffering a severe drought, with Los Angeles announcing what is, in effect, its first water rationing in its 200-plus-year history.

News out of California is mostly grim, but with the seeds of insurrection growing, things could be about to get worse. And that is bad news for America as a whole. California is often a lead indicator for the whole country. Watch California!

I completely agree. The country as a whole, while in better shape than California, is headed in the same direction. Get ready.