Paradise Lost: California is not too big to fail.

March 5, 2013

One early December morning, Las Vegas police moved in on the Silverton Hotel and Casino, just off the Strip and known for its 117,000-gallon aquarium. There, having located a getaway black Audi with no license plates, they arrested 31-year-old Ka Pasasouk​—​a Laotian immigrant with a violent history who had eluded deportation as well as imprisonment. The Dragnet-style work came less than 24 hours after police back in Northridge, a Los Angeles suburb known for a state university campus, discovered what they called a “very grisly tableau.”

Outside an overcrowded boarding house, described in press accounts as unlicensed, lay the bodies of two men and two women, whom Pasasouk has now been charged with murdering. The story captured attention up and down the already tense state, where the phrase “grisly tableau” could easily have found wide use in the ubiquitous conversations about California’s economic, political, and social decay. America’s promised land has turned dystopian.

Especially in the movies, Californians do love to imagine how the forces of darkness could bring an Armageddon-like end to their earthly paradise. That is because, as they leave the theater, it has always still been paradise. Lately, however, life outside the cineplex has also turned dark.

The image of idyllic California, as cable watchers from coast to coast know, took another devastating blow in mid-February, when the disgruntled former LAPD officer Christopher Dorner went on his wild, manifesto-driven killing spree. In the frantic, weeklong manhunt, during which police officers managed to shoot innocent civilians who stumbled in their way, a sense of unloosed anarchy descended.

Dorner and Pasasouk. The first a crazed ex-cop who, amid his quadruple murders, managed to tweak a race-troubled LAPD history into a PR campaign that stymied public information officers and even, appallingly, gathered a measure of public admiration. The second a near-perfect symbol of the breakdown of liberal institutions. Both accentuating the sense that everything is falling apart in the storied state.

A civic unease runs through California these days. Premonitions abound of terrible things ahead. Not the space invaders or blade-runners of cinematic imagination, but padlocked -public services, interminable DMV lines, closed classrooms, off-limits recreational areas, public employee strikes, inadequate or nonexistent police, fire, and medical responses.

Just days before the Northridge slaughter, San Bernardino city attorney Jim Penman addressed a crowded city council meeting in the wake of an elderly woman’s murder, telling residents of the bankrupt municipality to “lock their doors and load their guns.” Penman was not alone among California city officials forced to slash law enforcement budgets. Nor did he back down amid the predictable media tut-tutting: “You should say what you mean and mean what you say.”

California voters in November overwhelmingly pulled the lever for a one-party state. Democrats control the governorship, statewide offices, and veto-proof legislative majorities​—​all beholden to powerful state employee unions. If the recent standoffs with such unions in Wisconsin and Michigan seemed dramatic, just wait for the coming epic in California, a state known for manufacturing drama. No prospective Scott Walker or Rick Snyder, the governors of Wisconsin and Michigan, appears on the political horizon. But that doesn’t mean peace with the unions—the money to buy it doesn’t exist. So there will be a budget war of multiple battles and skirmishes. With Republicans already prostrate, some joke darkly​—​this, mind you, in the land of Reagan and “sunny optimism”​—​of adopting a Leninist approach: Let it all collapse .  .  . break the whole egg carton .  .  . build on the ruins .  .  . make lots of morning-after omelets. A dark scenario indeed, but name another more likely for Republicans.

To be sure, and before the joke is taken seriously, Lenin actively instigated disorder and turmoil, the better to erect his totalitarian structure and, yes, his one-party state. The gallows humor of California Republicans is strictly passive; they are resigned to let nature take its course, the better to dismantle failed structures and launch productive, pluralistic systems consistent with freedom. The state’s new political dispensation gives Republicans no alternative other than to be ready with workable proposals after the fall.

The grim conversations begin and end with public safety, but every conceivable policy issue​—​the economy, education, the environment​—​has made its way into the crucible, testing whether a state can survive with a prosperous, enlightened populace under the political left’s expensive, freedom-killing programs. Our Burkean libertarianism tells us that California’s current travails will prove it cannot.

Take Ka Pasasouk (please). Now charged with orchestrating four homicides, the Laotian had stuck his thumb in the eye of California’s criminal justice and immigration bureaucracies for more than five years. Charged with felonies ranging from auto theft and assault to illegal drug possession, Pasasouk, against probation department recommendations, last September was moved from jail to a drug diversion program by the Los Angeles District Attorney’s Office. Upon his release from state prison in 2008, authorities sought to deport him but failed to file requisite paperwork, the Southeast Asian thus becoming emblematic of government failure to serve and protect the public.

With California already under a U.S. Supreme Court mandate to relieve inmate overcrowding by multiple thousands, the Pasasouk case pricked the anxieties of a public already alarmed by what violent crimes may await them. At the end of the year the Sacramento Bee reported that gun sales had jumped dramatically​—​600,000 last year alone, up from 350,000 in 2002. Giving credence to the argument that more guns equal fewer crimes, gun injuries and deaths also plummeted over a corresponding period, the latter by 11 percent, though the Bee, not without an ideologically satisfactory explanation, attributes the improved numbers to “a well-documented, nationwide drop in violent crime.” Sure.

More recently, reports the San Francisco Chronicle, Oakland police last year arrested 44 percent fewer suspects on violent and other charges than in 2008​—​not because of shrinking crime rates but because of a triage policy adopted in the face of lower budgets. Notoriously, Oakland maintains the state’s highest crime rate. Last year saw “a 23 percent spike in murders, muggings and other major offenses.”

The political left may chortle that gun purchasers are panicking, but the reality is that more municipalities are likely to fall into bankruptcy (Moody’s warns of 30 more, joining Stockton and San Bernardino), severely cutting police, court, and jail budgets. State Treasurer Bill Lockyer, a man of the left, in December commissioned an economist and a research group to create a “default probability model” for city bonds.

Stirred into the state’s social instability are the swelling legions of school-aged youths now taking to the streets. Oakland-based Children Now’s research director Jessica Mindnich reports that, over the past dozen years, the number of young people neither in schoolrooms nor in workplaces has grown by 200,000, or 35 percent, disquieting to those who assumed that future generations, if cradled in good intentions, would surpass the achievements of their elders.

In a recent Google search of “prisoner release,” before we could finish typing the second, perfectly appropriate word, the screen suggested instead “prisoner realignment,” which is the Democrats’ euphemism for their response to the Damoclean order by the Supreme Court from May 2011. The idea was to shift “non-violent, non-serious, non-sex offenders” from the state’s prisons into already over-burdened county jails or alternatives such as home detention.

Some 9,000 prisoners were released under the program, with projections of more than three times that number to be freed. Over the nine months before the Public Safety Realignment Act of 2011 was enacted, according to law enforcement officials, property crimes had dropped 2.4 percent. In the nine months following its passage in early April of that year, property crimes rose 4.5 percent. Naturally, scholars are available to tutor the public on the difference between correlation and causation. The public​—​not to mention the law enforcement community​—​is not reassured.

Which brings us to the governor, 74-year-old Jerry Brown. Before defeating Republican Meg Whitman in 2010, Brown put in time as state attorney general and mayor of the aforementioned Oakland, not to mention two antic terms as governor back in the 1970s and ’80s​—​when many who voted for him this time around were not yet born. They might have heard about him as a colorful, iconoclastic, “Zen” chief executive who slept on the floor and dated a rock star, and who at least was not the dread millionaire Meg Whitman. But they knew little else and took the leap.

Unless they were public employees voting out of gratitude, the new-generation, low-information voters likely didn’t know it was Brown who, in his moonbeam years, allowed state workers to unionize in the first place, a decision that propelled the Golden State into decades of budgetary troubles and brought it to its current precipice. Besides placating unions, he also saddled businesses with a slew of environmental regulations and halted highway construction, the makings of a 30-year plague.

Let it not be said that Brown fails to tease and confound commentators, who need him to be fresh. Even in his first gubernatorial incarnation, as he marched to the left, he could come across as a kind of New Age conservative, pinstriped and looking for all the world like a young Churchill in the glow of a parliamentary speech. On alternate days he would make his “small is beautiful” philosophy seem to apply to state government, which to the sober-minded raised questions about his credibility.

In this January’s “State of the State” speech to the legislature, Brown, strangely complimenting his audience for their fiscal discipline, treated us to more of his philosophical eclecticism. He quoted the biblical story of Joseph, cited the Catholic principle of subsidiarity, and, as the pièce de résistance, offered this from Montaigne: “The most desirable laws are those that are the rarest, simplest, and most general; and I even think that it would be better to have none at all than to have them in such numbers as we have.”

Such messages may quicken the libertarian pulse, but only the most naïve could imagine the governor means to roll back big government rather than spread confusion about his direction. Last November, when voters approved his Proposition 30 to raise both income and sales taxes by $50 billion, he spread confusion to a national audience. CNN’s Candy Crowley, invoking the state’s property tax-limiting Proposition 13 of 1978, asked if he thought the birthplace of the tax revolt could now be “the start of a tax-increase sweep.” Brown answered:

Yeah, I do. I was here in 1978, when [the late Prop. 13 author] Howard Jarvis beat the entire establishment, Republican and Democrat, because the property taxes had just gotten out of control. Now the cutting, the cutting and the deficits are out of control. Our financial health, our credibility .  .  . as a nation that can govern itself, is on the chopping block.

Of course, he didn’t specify any “cutting” or “chopping” that he had in mind. Californians with long enough memories know that he was a ferocious opponent of the Jarvis amendment. Once voters overwhelmingly approved it, the “maverick” young governor miraculously remade himself into the measure’s chief exponent and champion. That sort of fast footwork made him legendary and, on occasion, a presidential contender, if usually too clever by half.

He’s still capable of the occasional magic act. A mere month after last fall’s election he announced—abracadabra!—a balanced budget. A “breakthrough,” he called it, pretending his ingenious abstemiousness had taken a giant step toward restoring California’s economic health. One Facebooking schoolteacher even suggested the governor was more frugal-minded than that notorious Republican budget cutter, Wisconsin representative Paul Ryan. Oddly enough, no disgruntled public employees emerged to produce a television spot of Governor Brown wheeling Grandma over a cliff.

Why not? Well, for one thing, Brown claimed that, while balancing the books, he had managed to find $2.7 billion more for schools and an extra $500 million for the university system while keeping a $1 billion reserve fund. Truly, a miracle worker. Moody’s, on record as expecting municipal meltdowns, was sufficiently impressed to keep the state’s ranking at A1​—​with the caveat that the presumed surplus would be used to pay down the debt. Standard & Poor’s upgraded its rating by a single notch.

Only one problem. The vanished deficit may be the least credible trick Jerry Brown has pulled in his cynicism-breeding career. Wyatt Buchanan of the San Francisco Chronicle explained the “convenient budget trick that helped make this possible.”

Over the past decade, lawmakers have balanced the state budget in part by borrowing money from special funds, revenue that’s raised by specific fees and taxes. Lawmakers have borrowed from those funds in the very lean times, and promised to pay them back.

Brown did this as well, and although he had planned last year to pay back special funds by $5.2 billion in the 2013-14 year, he now proposes to pay $4.2 billion. Turns out, says H.D. Palmer, spokesman for the California Department of Finance, that those special funds “had higher balances” or fewer needs than had been projected.

Buchanan also found a November projection by the Legislative Analyst’s Office that California would see a deficit in 2013-14 of $1.9 billion, “absent the lower debt payments to special funds.”

There remains, as the governor acknowledged, a “wall of debt” amounting to $28 billion. Brown straight-facedly presented a timeline, beginning this July and lasting into 2017, in which the wall would be knocked down in payment increments from $4.2 billion to $7.3 billion.

But that $28 billion, reported the Los Angeles Times, constitutes only a small, if delectable, appetizer to be served up to the Debt Monster over the next four years. The Times:

Numerous reports by state agencies, think tanks and academics have shown the wall of debt to be many stories higher than $28 billion​—​hundreds of billions of dollars over the next few decades. Brown’s repayment plan does not significantly reduce the sizable debt to Wall Street or account for promises the state has made to its current and future retirees but is not setting enough money aside to cover.

The amusing idea that Brown could play the moderate, or, in the words of the Orange County Register, put “a stop sign in front of his fellow Democrats in the California Legislature,” could turn grim, as disgruntled teachers and state employees, their guaranteed pensions suddenly in doubt, grab their pitchforks and pivot in the direction of the septuagenarian wonderboy. There’s still time to produce those TV spots of Grandma at the cliff, with Brown pushing.

It will not take much for the state union leadership to ally with the more ideologically committed legislators, of whom there are many, to create dramatic tensions and turmoil in Sacramento. And those of us who want to restore California’s fiscal health, not to mention the California dream, cannot count on a Scott Walker-style standoff. There is no Scott Walker, only Jerry Brown, who, loving to confound, could conceivably stand his ground. But that scenario strikes us as pure Hollywood. Brown does owe his political life to the unions, after all.

The governor’s giddy idea that his successful tax increase could sweep the nation runs up against another, more disturbing, trend: The looming municipal meltdown is not just a California problem but one faced by all the big-spending, high-taxing states, such as Illinois, Connecticut, Maryland, and New York. A day of reckoning is likely “at the national level,” according to University of Chicago economist Brian Barry, “no matter what happens to federal taxes or health care spending.”

We’re talking about as much as $4 trillion in unfunded pension liabilities courtesy of these financially troubled big states, whose governors doubtless hope to pass on their woes to Washington. The ever resourceful conservative idea man Grover Norquist, picking up on Barry’s prediction, suggests congressional Republicans exact from acquiescent Democrats a trade. He would exchange for bailout funds a plan to block-grant Medicaid and other entitlements to the states, thereby eliminating the costly, one-size-fits-all federal requirements that so bedevil state budget-makers. It could help.

As could a plan circulated by renowned supply-side economist Arthur Laffer, who would, among other solutions, have California march back to the Jarvis era, reversing Brown’s tax-hike bandwagon. He would moreover have California​—​in some rankings the worst state in which to do business​—​leave the 26-state bloc of forced unionism and join the 24 right-to-work states, many of which enjoy higher productivity, personal income, and population growth than their progressive counterparts. Sacramento as currently constituted won’t allow any of it.

Meanwhile the malaise. The once-Golden State now has the country’s highest poverty rate, more than 23 percent. Also depressing: California, whose population is 12 percent of the nation’s, is home to a third of the country’s welfare recipients. A hardened underclass, as Chapman University urbanologist Joel Kotkin has put into uneasy relief, is emerging as a source of social, economic, and political strife.

Laudably, Kotkin wants to see the unemployed raised up via a blue-collar boom, with housing, infrastructure-building, and energy, where the promise of undeveloped natural gas fields could lead the way. Again: Not bloody likely if Sacramento has any say.

Already, as Kotkin points out, the once-prosperous middle class has shrunk essentially to state retirees and those still living in homes protected by the Proposition 13 property tax limits. Allergic as they have historically been to class analysis and warfare, Republicans must answer by showing how a vigorous, free-enterprise economy can jump-start growth, spread prosperity, and lessen the chasm between the hyper-successful creative class on the coasts and the lumpenproletariat left behind on public assistance.

When multimillionaire golfer (and Republican) Phil Mickelson grumbled about his tax burden and threatened to leave the state, he found little sympathy among the suffering Californians who, their personal finances far more modest, are thinking of joining the growing out-migration of middle-class producers. A rebuilding GOP of necessity will have to direct its message to them and to ethnic groups, from the inner cities to the Central Valley, for whom the California dream of self-advancement still resonates.

The class anxieties were forced into relief when Texas’s Republican governor Rick Perry, in radio spots and personal appearances, put the welcome mat out for struggling businesses. As Perry knows, enclaves of California expats are mushrooming in Dallas and Austin suburbs. With exquisite symbolism, the national financial newspaper Investor’s Business Daily announced its plan to relocate its production facilities to the Lone Star State​—​not the first business to do so.

Brown’s inelegant response? Perry’s ad was but a “fart.” California’s glorious coastline, majestic mountains, and fair climate, reasoned the governor, would keep businesses slaving under his spell. But Perry, the bumbling cowpoke of last year’s presidential debates, has outfoxed him, perhaps having taken Benjamin Franklin’s counsel to “fart proudly.” Let the coastal breezes do their work.

What then, as Lenin might say, is to be done? We may dream that this rhetorically gifted performer might retire, perhaps to join his predecessor, Arnold Schwarzenegger, in a box-office stinkaroo. He does have plenty of experience with make-believe crime-fighting, always a Hollywood favorite.

Other than that, the political choices are excruciatingly limited. Republicans can marshal the constructive ideas of the Laffers and Kotkins while rebuilding an opposition party, but it will require quiet patience and resolve not to join the multitudes of out-migrants. The California we love always offers the most sensual solaces; Brown is not wrong about its natural glories. We must cherish them. That, and sit back serenely in our cushioned movie-house loges, popcorn at the ready, and watch as the horror show unfolds.


Shawn Steel, a former chairman of the California Republican party and current member of the Republican National Committee, is an attorney in Los Angeles. K. E. Grubbs Jr. is a longtime California journalist, now based in Washington, D.C.

Source: Weekly Standard