California Here We Come

The Democrats raised taxes. That’s no surprise. The moment the November election results were in giving the Democrats the super majority necessary to increase taxes, the die was cast.

And when the governor and the Democrat leadership announced that there would be no “compromise” on retirement and healthcare benefits for the public employee unions — in other words, those benefits would remain outrageously high — you knew that there would be no serious attempt to curtail spending. After all eighty-five percent of the budget is for salaries and benefits for government workers and if salaries and benefits are removed from the equation, there isn’t much left to cut — certainly not the $4 Billion by which the budget exceeds revenues.

Oh sure, there is the possibility that the legislature will eliminate 1,500 government jobs. The public employee unions are always willing to give up jobs rather than benefits because they know the minute that the revenue picture improves the government will hire everyone back and then some. In contrast, a loss of a benefit will require a much greater length of time to recover. Even at that, the loss of 1,500 government jobs is a pittance given that government employment has increased by 6,000 jobs over the last twelve months, while private employment has seen a nearly 100,000 job loss.

And when the Oregonian, the left’s unofficial media spokesperson, editorialized that the Democrats should avoid the “mistakes” of their counterparts in California by avoiding referral of any tax increases to the voters, you knew they would bypass the electorate.

And when you read that despite a $4 Billion deficit, the Democrats intended to expand government funded healthcare to another 135,000 people you knew that rationality had left the building. Nowhere in all of the debates over government spending, including education, welfare and healthcare spending, is there any attempt to improve efficiency — not even the simplest measure of removing from the numbers of recipients those who are in the United States illegally.

And finally, when you read that, despite Vice President Biden’s comments that healthcare costs are crushing the American economy, the intention of the national Democrats was to increase that burden by taxing healthcare benefits, and Oregon Democrats to tax healthcare providers you began to wonder whether rationality in government will ever return.

The tax increases passed by the Democrats to date amount to nearly $750 Million and they aren’t done yet. More importantly, even when they are done they still won’t be done because the legislature anticipates that the revenue forecasts for second, third and probably fourth quarter will be for a continuing decline and the budget will no longer be in balance. Oregonians can expect that the legislature will reconvene in February of 2010 amid further destruction of the Oregon economy and will again raise taxes.

Among the current tax increases are an increase of nearly twenty percent on those earning over $125,000 per year. At that level you are dealing with virtually every small businessperson in Oregon that employs a person beyond the owner. And because capital gains are taxed at ordinary income levels, this increase means that the tax on capital gains has also increased at the very time when Oregon should be looking for new capital infusion to recover from the economic downturn.

But here is the stunning part. Oregon has the second highest unemployment rate in America. It trails Michigan (hard hit by the collapse of the automobile industry) by tenths of a percentage point. At 12.4% unemployment, Oregon has exceeded its highest recorded levels of unemployment. Oregon is a small business state. It does not have a massive industry that can dramatically effect its employment picture. When there is a 12.4% unemployment level in Michigan you can look squarely at the auto industry and know the cause. When there is 12.4% unemployment in Oregon you know that it is diversified and affecting virtually every element of employment — except for government employment.

That means that the problem is structural — not industrial. There is something fundamentally broken in Oregon’s economic structure. It is the reason that Oregon, in good times and bad times, leads the rest of the nation by one or two percentage points in unemployment. It is the reason that Oregon’s working men and women have one of the lowest per capita incomes in the nation. It is the reason that the job losses, when they occur, fall disproportionately on the high-end job categories and minimally on the minimum wage employment.

Oregon has a tin ear when it comes to business and private sector employment. The preservation of government and government employment is not only paramount but virtually singular among Oregon’s governing class. Oregon’s government is run by the public employees unions and for the public employees unions. The election of the Democrat majority is paid for by the public employee unions.

The massive amount of government jobs, the handsome salaries and benefits for those government employees, and the insulation against any economic rectification because of the financial power of the public employee unions has already ruined California. California is on the verge of economic collapse because the public employees unions run the state and local governments — and run them much like they do in Oregon — with total disregard for those who must foot the bill for their excesses.

Oregon is not far behind and when it occurs, Oregon voters will have only themselves to blame.