We have often argued the case that quite soon a major U.S. city or an entire state government will go bankrupt. The politicians running these entities have imposed heavy tax burdens on their citizens while allowing crime, homelessness, and other quality of life issues to become bigger and bigger problems.
As a result, businesses and residents abandon these cities and states in order to be safer and to keep more of their wealth away from greedy government bureaucracies. This out migration reduces the tax base, increases the taxes of those that remain, driving more people out of the state, and the financial death spiral is in place.
The top cities likely to go bankrupt, in our minds, are Los Angeles, San Francisco, New York City and Chicago. Top states with the chance to go bankrupt include California, Illinois, New York and New Jersey. All of these entities are facing massive budget shortfalls, crime, homelessness, and other problems and untold thousands of their citizens have been moving to other places, taking their tax dollars with them.
Depending on the latest and lamest actions by their inept politicians, our views on which city and state will go bankrupt first changes month to month. Last month we thought Chicago would go first given the heavy unfunded liabilities it is facing in the next too distant future. Before that we thought it might be New York City when even its mayor, Eric Adams, commented that the current situation in the city was unsustainable, given the burden of caring for almost 200,000 illegal immigrants.
But now, given the total incompetence of the political class in California, maybe that state and some of its dying cities deserve to be declared bankruptcy race leaders. While the state sinks further and further down the drain, the attitudes and actions of its politicians are inane and ineffective in providing good government and good quality of life for its citizens.
Example Number One -
California governor, Gavin Newsom, was recently bragging on how his state was the home to more Fortune 500 companies than any other state.
Specifically: "For the first time in 10 years, CA is officially home to the most Fortune 500 companies. More than Texas. More than Florida. 57 incredible and booming companies, right here in the Golden State."
That might be good news but in reality in 2022 about 340,000 state residents moved out of the state.
Los Angeles, San Francisco, San Diego and Santa Clara counties each lost about 40,000 residents on their own.
The state’s current population is about 1.2% less than it was in 2019.
These latest out migration numbers follow in the reality that the state lost a seat on Congress back in 2020 as a result of its declining population while states like Texas and Florida actually gained a seat.
California currently has, by far, the largest homeless population in the country, more than twice as many homeless as New York.
Under Newsom’s tenure, the state government went from a $90 billion budget surplus a year ago to at least a $30 billion shortfall this year.
High rates of homelessness, the highest gas and utility prices in the country, and even the worst road conditions in the country are just some of the reasons why people are leaving the state.
Given these realities, maybe bragging about having the most Fortune 500 companies in the country in his state is the only thing that Newsom can brag about.
Example Number 2 -
As most people already know, most politicians have no concept of what sound and wise economic policy is. Be it in Washington or state houses across the country, government economic policies, driven by their politicians, usually make bad economic conditions worse or introduce new economic problems.
Such is the case where California's politicians recently decided that fast food workers deserved a 25% pay increase and they raised the minimum wage for these folks from $16 an hour to $20 an hour, completely oblivious to the economic downside of this idiocy, as recently noted in the press:
Mod Pizza, a pizza chain in the state, recently announced it was closing five locations in california, in all likelihood because of the increase in their wage expense caused by the new $20 an hour minimum wage.
The New York Post reported that in just one of those closed locations 15 employees lost their jobs.
Employees were told that they got a two day notice of their terminations.
They are not the only casualties of the minimum wage hike since some McDonald's locations in the state are charging a ridiculous $18 for a Big Mac in order to cope with the higher minimum wage.
We have previously discussed the reality that thousands and thousands of fast food workers, like those that were once employed at Mod Pizza, have also lost their jobs since fast food locations are trying to cope with the higher labor costs in their business.
Well duh, only the politicians did not see this happening: “The good news is that you got a raise, the bad news is that you no longer have a job.” And as prices for fast food go up, those that most frequently patronize these fast food locations, those at the lower end of the economic wage scale will eat out less often, causing further financial difficulty for the fast food locations owners and the economic death spiral is in place: raised labor costs means higher meal prices which means less sales which means less revenue which means cut more staff, etc.
And thus, California politicians create, rather than resolve, another issue facing their resident.s
Example Number 3
A basic tenet of government is that government should only exist to do jobs that benefit everyone and can do those jobs most efficiently. Those jobs include such things as a justice system, police, fire and EMT services, sound infrastructure such as roads and bridges, etc. Do these functions right and you have a useful, efficient government operation.
Well, apparently the politicians in Oakland do not have a handle on some of these basic functions. Crime is running rampant in the city: robberies have increased 38% in a year and car thefts have increased 44% in the past year. In fact, one out of every 30 Oakland residents have had their car stolen in the past year.
The high crime rate has driven many businesses out of the city including In-N-Out Burger and the last Denny’s restaurant. Other businesses have closed due to the high crime rate and the danger to the businesses’ employees.
Also, many city roads are in need of repair. And this brings us to an interesting failed government issue in the city:
A street in Oakland is in horrible shape and needs to be replaced and replaced, a typical government function.
But this issue is not going to be resolved anytime soon.
The crime in the area of the street that needs to be repaved is so bad that the repaving contractor decided it was too dangerous to send its repaving crew to the area to do the job.
Think about this reality: the street needing repaving was too dangerous for a crew to work on in the middle of the day because crime was too high as was the potential for danger. A very, very basic tenet of any government entity is to protect the lives of the people it governs. Obviously, the politicians in Oakland have failed miserably in this area.
Example Number 4
Consider some realities that exist today in the state of California:
They are facing a large budget deficit.
Crime rates are skyrocketing throughout the state’s cities.
Homelessness rates are also sky high.
The state’s infrastructure is falling apart.
The state is being overwhelmed with untold numbers of illegal immigrants that siphon off taxpayer wealth to pay for the illegal immigrants’ food, shelter and other needs.
Residents are taking themselves, their families, their businesses, and their tax streams out of the state.
Gas prices and tax burdens are some of the highest in the country.
California public schools are some of the worst in the country.
Lots of problems to work on and a dwindling tax base to provide the support to pay for the solutions.
Consider some other, historical, realities:
California was not a participant in the Civil War.
No one in California owned slaves back in the day.
There were no cotton plantations in the state.
There are no surviving slaves from the Civil War living in the state today.
And yet, despite the major problems that face California citizens today, the fact that California had absolutely no part of the civil war and slavery, the state politicians have decided that it would be a good idea to pay reparations to slave relatives that live in the state:
The state government’s Senate Judiciary Committee has approved a bill that would create a state agency that would implement the state’s reparations task force recommendations.
That task force recommended that eligible black residents of the state, distant relatives of slaves that lived far away in other states, each get the ridiculous sum of $1.2 million.
Thus, untold thousands of people could get $1.2 million of taxpayer wealth while the state government has about a $30 billion budget deficit.
Big problems to resolve, but state politicians are focusing on giving away taxpayer wealth to people that were never slaves, people who never picked cotton. If the state government has that much money lying around, would it not be a better idea to invest that money in inner city schools so that black kids could get a real education vs. what they get today? If it has that much money laying around, how about feeding the hungry or sheltering the homeless in the state? Insanity.
That will do it for today: quite possibly the most inept group of politicians in the country. They create new problems without resolving existing problems, they work on projects that make no sense relative to the major issues facing most of the state’s citizens while at the same time driving residents and businesses out of the state, losing the tax wealth that is leaving with them. Looks like California may have retaken the lead to become the first state government to go bankrupt.
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If you agree that we need to deseat every member of Congress for their lack of success and accomplishment, then please consider going to the following petition link to help the cause:
https://www.change.org/p/deseat-congress-reset-freedom
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