NCPA - National Center for Policy Analysis


May 4, 2009

California's increasingly severe and largely self-inflicted economic crisis is impeding national economic revival, says columnist George Will.

  • Under Arnold Schwarzenegger, the best governor the states contiguous to California have ever had, people and businesses have been relocating to those states.
  • For four consecutive years, more Americans have moved out of California than have moved in.
  • California's business costs are more than 20 percent higher than the average state's.
  • In the last decade, net out-migration of Americans has been 1.4 million.
  • California is exporting talent while importing Mexico's poverty.


  • If, since 1990, state spending increases had been held to the inflation rate plus population growth, the state would have a $15 billion surplus instead of a $42 billion budget deficit, which is larger than the budgets of all but 10 states.
  • Since 1990, the number of state employees has increased by more than a third.
  • In Schwarzenegger's less than six years as governor, per capita government spending, adjusted for inflation, has increased nearly 20 percent.

Liberal orthodoxy has made the state dependent on a volatile source of revenues -- high income tax rates on the wealthy, says Will: 

  • In 2006, the top 1 percent of earners paid 48 percent of the income taxes.
  • California's income and sales taxes are among the nation's highest, its business conditions among the worst, as measured by 16 variables directly influenced by the Legislature.
  • Unemployment, the nation's fourth highest, is 11.2 percent.

California has become liberalism's laboratory, in which the case for fiscal conservatism is being confirmed, says Will.  The state is a slow learner and hence will remain a drag on the nation's economy. 

Source: George Will, "California as Liberalism's Laboratory," Washington Post/Real Clear Politics, May 3, 2009.

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