patrick.net

While UOP is just a tiny school in Stockton the facts as presented don't seem grossly out of line.

Though I think it is ignoring the present state budget crisis and benefit the state is getting from stimulus money including unemployment extensions. The latter running out is just going to put an equivalent pressure on state welfare funds.

The state has a $20B shortfall. It can either raise taxes $20B or cut $20B of spending. At $60K per job, that's 300,000 state jobs on the block, one-tenth of the paper's prediction of 36,000 jobs lost this year.

Also, housing starts at 150,000 per year in 2014 doesn't seem that unbelievable for a population approaching 40M people.

But 1 start for 266 people does sound a little high, actually.

That's about 1 start per 100 households. I really don't see new jobs coming to areas with buildable land, and infill has its own challenges with all the vacancy of existing stock.

There's certainly demand for new housing, but this is demand without the ability to find capital to fund it. With the job situation the way it is I think jobs are still going to be leaving the state in search of hungrier populations willing and able to work for less.

Gridlock in DC isn't going to do any favors for the state economy, either. The 1994-2000 time frame was pretty dismal until the dotcom lottery started rolling in 1996-97, LA only started rolling in 2001, and rest of the state had to wait for the real estate boom to fund its good times.

@Troy
I disagree with this:
"It can either raise taxes $20B or cut $20B of spending"

It's just something that bothers me when people go for one extreme or the other, and usually allows people to draw extreme scenarios from that data. A 20B gap has to be closed, which could come from something like 7B in spending cuts, 4B increase in taxes, 5B in salary cuts, 4B in layoffs. There are a whole slew of options that could be used to close that gap, it's not really an either or situation.

From what I can tell, California provides more social assistance programs than most other states. I'm willing to bet that they could cut back on some of them and still provide more than other states.

I'm a social worker, damn proud to be one, but I've seen alot of excess.

pkennedy says

There are a whole slew of options that could be used to close that gap, it’s not really an either or situation

Doesn't matter. Without any debt issue to cover the gap, somebody's ox is getting gored.

"7B in spending cuts, 4B increase in taxes, 5B in salary cuts, 4B in layoffs"

"spending" doesn't disappear into a black hole. That spending is spent on STUFF and SERVICES and is thus somebody else's INCOME. Taxes are of course theft so more taxes is more theft in the system. $5B in salary cuts will result in $5B less spending power by state employees. A "salary cut" is just a layoff by degrees. To the larger economy, the result is similar.

Pain.

elliemae says

I’m a social worker, damn proud to be one, but I’ve seen alot of excess.

No doubt, but all that "excess" is trickle-up economics in action. Remove it and the bigger fish get hurt, too.

Where are these jobs going to come from is what I want to know.

pkennedy says

@Troy

I disagree with this:

“It can either raise taxes $20B or cut $20B of spending”
...something like 7B in spending cuts, 4B increase in taxes, 5B in salary cuts, 4B in layoffs...

Hey, salary cuts and layoffs ARE spending cuts.

So, you talk about a mix of 4B of increase in taxes and 16B in spending cuts. There are some other sources of reducing deficit, like:

1. Selling assets.

2. Increasing direct fees.

All of this is already in process.

Just one example: California State parks campgrounds cost now $25-$35 a night, while in National parks it's $18 for much better services. ( Checked this recently in Kings Canyon Nat. Park and in state parks along "Redwood" highway (US101 North of Santa Rosa). In Oregon and Washington the fees are pretty mush what they used to be in California about 5-7 years ago, i.e. $8-$12.

Also, senior discounts in CA is flat $2, while in National Parks, OR, and WA it's 50%.

Also, many such increases are done by administrative decisions, which is easy to introduce, while tax increases and significant spending cuts effectively require 2/3 majority of CA Senate.

The only problem is that AFAIK California annual budget deficit is more like $80B rather that $20B.

@Troy
The difference is fairly substantial though. When it comes from slashing 20B in jobs, that then puts a massive onus on unemployement, cobra, etc. When it comes from straight tax increases, that hurts everyone and obviously can cause people to run else where. When it comes from pure wage cuts, that would be a large cut across the board. When it's divided up, it not only fixes californias problems, but in effect doesn't push the problem to just one other area, like unemployment. It will hurt everything but nothing massively.

It might all end up coming/going to the same places, but how it gets there is what makes the difference. Some actions will decrease taxes (eg if you fire people, and they no longer pay taxes) or you cut the profits of some big business that was selling you equipment, but if you level it across all business, and people it isn't that drastic.

elliemae says

From what I can tell, California provides more social assistance programs than most other states. I’m willing to bet that they could cut back on some of them and still provide more than other states.
I’m a social worker, damn proud to be one, but I’ve seen alot of excess.

I'm just curious if you could elaborate on this some...

elliemae says

From what I can tell, California provides more social assistance programs than most other states. I’m willing to bet that they could cut back on some of them and still provide more than other states.
I’m a social worker, damn proud to be one, but I’ve seen alot of excess.

I don't think we have enough social welfare programs. We have some of the highest homeless rates around. We also have some of the worst k-12 schools in the country. I believe you pay now for these services, or you pay later in other ways such as violence and crime. I would rather live in a nicer world to begin with.

elliemae says

From what I can tell, California provides more social assistance programs than most other states. I’m willing to bet that they could cut back on some of them and still provide more than other states.
I’m a social worker, damn proud to be one, but I’ve seen alot of excess.

I live in CA. It does provide more social assistance than others, it's called PRISONS. I think we can do better.

Troy says

pkennedy says

There are a whole slew of options that could be used to close that gap, it’s not really an either or situation

Doesn’t matter. Without any debt issue to cover the gap, somebody’s ox is getting gored.
“7B in spending cuts, 4B increase in taxes, 5B in salary cuts, 4B in layoffs”
“spending” doesn’t disappear into a black hole. That spending is spent on STUFF and SERVICES and is thus somebody else’s INCOME. Taxes are of course theft so more taxes is more theft in the system. $5B in salary cuts will result in $5B less spending power by state employees. A “salary cut” is just a layoff by degrees. To the larger economy, the result is similar.
Pain.

That is sheer bubble mentality the more you have the more you spend. Most people forget that after things improve.