Political class insanity continues to rampage across the country:
1)We have often discussed the reality that a major U.S. city and possibly an entire stature government will soon go into bankruptcy for its lavish spending and incompetence at managing a budget. Leading cities that are facing a fiscal cliff include, among others, Chicago, Los Angeles, News York City, and San Francisco. State governments that are in worsening financial shape include New Jersey, New York, Illinois, and California.
The fiscal disaster formula that these cities and state face is always the same:
State and city politicians spend way more than they can afford based on the taxes they collect.
The government programs and operations they oversee always seem to be inefficient and end up spending more than they should.
This results in a budget shortfall that requires the taxation burden on citizens to go up because these politicians rarely cut budget and programs.
The higher tax burden drives more and more residents and businesses to leave the state and find less taxing locations which reduces the tax base and tax revenue, creating more of a budget shortfall.
This pushes politicians to raise the tax burden even more, driving our more residents and business, and the fiscal death spiral is in place.
And recent news out of California reinforces our view that California is still in the running for being the first state to ever go bankrupt:
We have previously discussed the reality that the state was facing possibly a $68 billion budget shortfall in fiscal 2025.
It also has unfunded future financial liabilities that are approaching a trillion dollars.
And yet, the state politicians continue to use taxpayer wealth to fund the caring for and health of the thousands and thousands of illegal immigrants in the state.
So much so that Governor Gavin Newsom had to recently sign emergency legislation that would plug a $2.8 billion hole in the state’s Medicaid program, Medi-Cal.
Yes, rather than cut back on the free healthcare for the state government gives to illegal immigrants to shore up the Medi-Cal program for state citizens, the state politicians decided just to spend more.
This is only part of the additional expenditures that were needed to close the original $6.2 billion Medi-Cal budget gap.
Under a state law passed in 2022, every poor adult in the state, regardless of immigration status, gets free health care.
The original estimate is that the state government and its taxpayers would only cost $2.7 billion to cover the healthcare costs of 764,000 illegal immigrants living in the state but as always, initial government estimates of the program cost were dramatically understated.
The current cost is estimated to be about three times as much as originally promised or about $8.4 billion.
State legislator, Carl De Maio, summarized the insanity quite nicely: “This puts the health coverage for poor people, children, the neediest among us, at risk. Why? Because we’ve given away the store to noncitizens. We’ve given illegal immigrants free health care at taxpayers’ expense.”
And, according to government sources, this additional $2.8 billion may only keep the system solvent until June.
An old saying goes as follows: “when stuck in a hole, stop digging.” Same concept here: when stuck in a budget shortfall hole, stop spending more money you do not have, especially at the expense of the taxpayers who are funding the hole digging.
2)And while California’s state government in total is facing major fiscal problems and wasteful spending, apparently that problem has not been communicated to at least one member of the state’s political class, as recently reported by the Daily Caller:
Apparently, Ricardo Lara, the state insurance commissioner, spent tens of thousands of dollars on lavish indulgences.
And he allegedly financed some of these expenses, traveling, and expensive dining, with $30,000 he withdrew from his failed lieutenant governor campaign committee coffers.
His expenses included $700 meals at high end Los Angeles restaurants and travels to Bermuda, Paris, and Bogota.
His travel allegedly prevented him from attending to critical duties and meetings as insurance companies are leaving the state to avoid dealing with natural disasters.
The Daily Caller reporting says that no one or any news source has been able to find any indication that Lara is going to use his campaign funds to actually run a campaign, calling into question the ethics of using unspent campaign funds on personal, ego maintaining expenses: “It’s a way for them to forward their funds and keep a campaign war chest, regardless of whether they have any real intention of running for that office or not,” Sean McMorris, who studies campaign ethics at Common Cause California, told the Standard. “But the public and the press absolutely have a right to question how a politician is using campaign funds in a committee that they have open.”
According to ABC News Los Angeles, the commissioner has taken at least 46 trips outside of the country and while traveling often stayed at expensive five star hotels and that he has missed nearly all of the state’s senate insurance hearings since assuming office.
As the state sinks into fiscal depths, at least one state government bureaucrat is allegedly still living the good life, gaming the system for his own enjoyment and fun.
3)As we discussed above, Chicago is one of our top candidates to go bankrupt. Residents and businesses are fleeing the city as taxes and crime keep going up. And even though the former mayor, and a failure, Lori Lighthouse, is no longer in office, things have not changed. The latest crime statistics show that Chicago is the latest winner of the title, “Murder Capital of The Country.”
There were 574 murders in Chicago 2024, more than one and a half murders a day. More people were murdered in Chicago in 2024 than New York City and Los Angeles COMBINED.
Thus, way to go Chicago and your politicians, you may indeed become the next major city to go bankrupt as your tax base flees.
4)Back to California for some real insanity. According to an article from the California Insider website:
California politicians for years have blamed and shamed the oil industry in the state for high prices even though multiple studies have shown that state government policies have driven up the cost of gas in the state, not the oil industry.
California gas driven car owners pay about $1.36 more per gallon for gas vs. the national average and in some cases the price for a gallon of gas can be up to 90% higher than the national average.
These policies have included higher than average state government gas taxes, stricter environmental compliance requirements, and other market meddling by state politicians.
As a result, Phillips 66 has decided that it has had enough of dealing with meddling politicians and we will be closing two California refineries and Valero feels the same, planning to close one of its California refineries..
The shuttering of these three refineries will reduce the amount of gas refining in the state by about 17%.
California, which once hosted 40 operating refineries, will only have 17 left after these three shut down with other shutdowns quite possible.
Thus, to keep up with demand the state will have to import more and more gas from other parts of the country which, not surprisingly, will be more expensive than using the gas refined from the three shut down refineries which will increase gas prices even more in the state.
According to a USC study, as a result of the refineries shutting down, “To compensate for the closure of the Phillips 66 refinery, California will most likely have to increase its imports of California-compliant gasoline, which is costly, and surviving refineries may have to increase capacity utilization.”
But do not worry, the California Energy Commission has proposed a plan to make life easy for the state’s cash strapped drivers.
The Commission has floated an idea that the state government take over the three refineries once Phillips 66 and Valero leave and that the state get into the gas refining business.
The politicians in the state have failed at just about any problem they tried to resolve:
Despite spending untold billions of dollars on the homeless crisis in the state, almost 200,000 people in the state are still homeless.
Crime continues to escalate out of control in the major cities in the state, resulting in businesses and residents abandoning those cities for safer environs, both elsewhere in the state and outside of the state.
The public schools in the state continue to do a poor job educating the state’s kids.
Faulty fire prevention and treatment programs have led to wildfires that have decimated parts of the state and killed people in the process.
Even building a simple, straight tine railway line, the infamous California high speed train line, has been a colossal failure with the original $33 billion budget estimate ballooning to almost four times that amount even though the plans have been scaled back.
Given the failures of the state government on the issues that the state is supposed to handle, does anyone really think that the state government could take over and efficiently operate oil refineries? Seriously, does anyone think that?
No sane person believes that state government control and operation of oil refineries is going to reduce the driving costs of the state’s residents. Which means more state residents will eventually give up on the high cost of gas and living in the state and head elsewhere, reducing the tax base, making the current state budget crisis even worse and the financial death spiral into bankruptcy is in play.
Enough insanity for today: stupid oil refining idea in California, a California bureaucrat allegedly enjoys the high life at the cost of his political donors, California’s tending to illegal immigrants threatens to bankrupt its Medicaid system, and Chicago retains the title of the city with the most murders.
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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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