Ozy: Why Jon Stewart is Wrong About California

My wife and I love Jon Stewart – until he discusses California.

When California voters approved Proposition 30 last year to raise the sales tax and increase taxes on the state’s wealthiest residents, Stewart relished the moment.

“California actually decided to pay for some of the sh*t they want to do,” he chided. “My baby’s growing up!”

But Stewart’s wrong when he describes California as a place where citizens want services but don’t want to pay for those services. Like many Americans, he ignores how state governments differ from the federal government, which he knows extremely well. That difference can best be summed up as follows: Most federal spending in the U.S. goes to corporations and citizens, whereas most state spending goes to government employees.

The federal government devotes most of its $4 trillion in annual spending to citizens receiving retirement benefits and to corporations providing medical, defense, construction and other services. Less than 20% of federal spending goes to federal employees.

In contrast, 60-80% of the $2.5 trillion of state spending per year goes to state and local employees. That’s because under our federalist system it is states that provide the lion’s share of domestic services, from maintaining public safety to building infrastructure to educating our children.

And just as defense contractors and health care companies actively lobby the federal level government to keep the money flowing, so state and local employees resolutely pursue the funds that keep their service livelihoods going. Even before the U.S. Supreme Court’s decision in Citizens United, California permitted Super PACs, and the state’s government employees have consistently been by far the state’s largest political spenders.

Over the last decade, the “government-employee complex” in California has injected hundreds of millions of dollars into campaigns and political activity. And for good reason: The returns are huge. For example, the California Teachers’ Association (CTA) spent less than $50 million in 2012 on a ballot initiative in support of a tax increase of which roughly $15 billion will go to the compensation and benefits of its members.

Of course, there’s no free lunch. Whenever lobbyists succeed in steering more spending in their direction, someone loses. In California, the losers tend to be welfare recipients, college students, park users, the justice system, and taxpayers.

For example, state spending on the University of California fell 20% and student fees more than tripled over the past ten years despite the fact that state revenues grew by more than 50%. One reason is that state spending on employee pensions and other retirement costs rose 140%.

Californians are more than willing to pay for services but they don’t want to pay excessively to intermediaries for providing those services. Case in point: Did you know that in California, the state legislature pays prison guards salaries that are twice the national average? Last year, retirement benefits awarded by state politicians cost the state 33% on top of salaries and consumed nearly 30% of discretionary state spending.

State employees did not cause this problem. State politicians currying favor with those employees caused it. And it’s not as if all state and local employees earn unreasonable amounts of compensation. They don’t. But because there are so many state and local government employees and politicians have made such huge promises to them, the amounts in aggregate are staggering. Which is one reason Governor Jerry Brown should seriously consider using the recently announced increase in state revenue to fund the massive shortfall in the state’s teachers’ pension system.

California offers comedians like Stewart no shortage of good material, from Lindsay Lohan to high-speed rail boondoggles to, yes (as observed by Stewart), its overuse of avocado. But, if you want to wade into the seasoned world of California politics with a bullhorn, then you’re going to need to do a little growing up first.

Link to full article: http://www.ozy.com/c-notes/californiafiction/1413.article