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California deficit soars to $73 billion

A lesson in how not to lead. Credit: Getty

March 2, 2024 - 4:00pm

Incredibly, the Democratic establishment still looks to Gavin Newsom as their answer to Joe Biden. Yet frothy accounts of the California Governor’s record are about as accurate as a Google AI treatment of American history: totally fraudulent. 

What is most remarkable is that, even with an huge AI boom enriching California tech firms like Nvidia, the state’s budget deficit has continued to expand, this time by $15 billion to a whopping $73 billion. That is in spite of the fact that tech booms tend to inflate California’s revenues enough to keep up with soaring costs. 

But not this time: the state’s legislative analyst’s office predicts continued operating deficits through 2028 — a not surprising consequence of spending that has tripled on a per capita cost-adjusted basis over the last 50 years. In contrast, prime competitor states like Texas and Florida enjoy large budget surpluses. 

One problem may be that it’s not clear that AI — the current rage in the tech world — will even create jobs, as did previous tech booms. AI seems as likely to swallow tech jobs as create them, essentially replacing software and engineering staff with bots. Last year alone, some 78,000 tech jobs disappeared while job growth, notes the Public Policy Institute of California, has been in generally low wage service jobs.  Even firms with a big stake in AI such as Salesforce, Meta and Google have been laying off thousands of workers.

At the same time, Governor Newsom is pushing policies that are thinning out the tax base. High energy prices caused by the state’s draconian climate policies are impoverishing residents, and making the state a no-go zone for industrial expansions. A Hoover Institution report, released last year, observed that in 2020, California had only one-seventh the number of company-initiated capital projects than the leading state, Texas. Additionally, from 2018 to 2021, 352 companies headquartered in California moved their headquarters out.

Other measurements of economic activity are less than impressive. California has both the country second highest state unemployment rate, and job openings have cratered faster over the past year than all other states outside Wisconsin. In addition, few people  from outside the state, a traditional source of innovation and growth, are entering California. Once one of the most popular destinations for new residents, the Golden State now ranks towards the bottom in attracting newcomers. That this erosion now includes both middle class educated professionals, whose exodus increased sharply since 2019 as well as the foreign-born, only adds to Newsom’s woes.

It’s no surprise, then, that our would-be President is increasingly unpopular with California voters. He rode high when the state had a huge surplus but now he has to choose between moderating the cascade of spending, or alienating the all powerful public employee lobbies, his base of support, who value their lavish public pensions. Greens too may find their pet projects eviscerated.

All this bodes ill for any Newsom-for-president boomlet. Can he run on the pledge, as Reagan did, to do nationally what he did for California? Democrats would be insane to back this notion, and may decide it’s better to run a clueless dotard than clued-in failure.


Joel Kotkin is the Hobbs Presidential Fellow in Urban Futures at Chapman University and author, most recently, of The Coming of Neo-Feudalism: A Warning to the Global Middle Class (Encounter)

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El Uro
El Uro
4 months ago

Really, I don’t know what to say. I think Google’s Gemini is smarter than Newsom

Simon Boudewijn
Simon Boudewijn
4 months ago

The greatest evil in the world bar none – the one which causes more death, violence, crime, mental illness, depression, economic destruction, War, Famine, health disasters, race hate, loss of money in pensions, Middle and Working class wealth going to the Billionaires – destruction of Family, Morality, Ethics Religion, making more stupidity, greater crime and no punishment, open borders to millions of criminals, Political and corporate corruption, and all round evil and wickedness – and a million other things is………..

Main Stream Media and Social Media and the Entertainment Industry.

They are Satanic and out to destroy the soul of the West, and your Soul too.

Newsome is 100% a creation of theirs. The evil and wicked Biden too, the whole destruction of all, the evil Uniparty in Parliament and Congress and run the EU – they did it by the Media.

Opening these pages, the MSM – you are staring at sheer evil.

If the world does ever throw off the evil which rules the world – it is the news offices and news papers and social media which will have to be brought down.

Warren Trees
Warren Trees
4 months ago

“The Social Dilemma”. Must watch documentary.

UnHerd Reader
UnHerd Reader
4 months ago

Anyone else thinking of austin powers?

Liam F
Liam F
4 months ago
Reply to  UnHerd Reader

Yeah Baby!

Hale Virginia
Hale Virginia
4 months ago

I genuinely think he may be a sociopath. Certainly a narcissist. This man hollow as they come.

ChilblainEdwardOlmos
ChilblainEdwardOlmos
4 months ago
Reply to  Hale Virginia

He was great in American Psycho!
California Uber Alles!

UnHerd Reader
UnHerd Reader
4 months ago

High energy prices are not because of draconian climate change policies, but are caused by lawsuits. A number of mega fires were started by electrical wires felled by winds. A massive number of lawsuits were filed against the energy companies. Consequently, the companies passed the cost to consumers. I lived in California, northern and southern, so I know what happened. The deficit is bad news, as Jerry Brown left with a $30 billion surplus.

net mag
net mag
4 months ago

Who does this Newsom guy think he is ? Justin Trudeau ?

Bernard Brothman
Bernard Brothman
4 months ago
Reply to  net mag

I like the analogy.

Ian_S
Ian_S
4 months ago

Newsom is doing us a real favor by showing just how unsustainable it is to base your model of governance on Social Justice ideology. Like a feckless kid blowing through an inheritance, Newsom is merely spending down the capital saved by previous generations. Take note, woke utopians, Newsom gave you everything you asked for to build your fantasy utopia, granted all your “I’m cleverer than everyone else” ideas and wishes, and this trainwreck is the result.

Right-Wing Hippie
Right-Wing Hippie
4 months ago

Pictures of Gavin Newsom always make me think he’s the villain from a 1980s cyberpunk thriller who has Purple-Rose-of-Cairo‘d his way out into the real world.

edmond van ammers
edmond van ammers
4 months ago

You think that’s bad. The state of Victoria in Australia, population 7 million and no tech industry, has a deficit of Au$ 135 billion (80 billion US$) We need help, but not from Newsom!

Jim Veenbaas
Jim Veenbaas
4 months ago

But you got lots of wind and solar.

Samuel Ross
Samuel Ross
4 months ago

Eighty billion dollars in a population of seven million comes to around $11,500 apiece. Not an insurmountable debt burden. Considerable, yes.

David Giles
David Giles
4 months ago
Reply to  Samuel Ross

I think he wrote DEFICIT of Au$135; not debt.

Guys, which is it, debt or deficit?

Russell Hamilton
Russell Hamilton
4 months ago
Reply to  David Giles

Victoria’s state debt is $135 billion, deficit this year more like $10 billion. The government keeps spending on dubious infrastructure programs to try to keep up with astronomically high immigration numbers.

Katja Sipple
Katja Sipple
4 months ago

I wonder if I should start taking and placing bets about how high the deficit can go in that failed state of California?

Samuel Ross
Samuel Ross
4 months ago

Also, Gavin Newsome has never yet found a problem that cannot be solved with more government spending, as opposed to looking to the private sector to find more efficient solutions.

Samuel Ross
Samuel Ross
4 months ago

I beg to differ with the author on one point:

“alienating the all powerful public employee lobbies”

They are not ‘all-powerful’. They are ‘powerful’ and there is the difference. ‘All-powerful’ indicates that they cannot be successfully fought against to victory. ‘Powerful’ indicates that victory is possible.

The author has unknowingly bought into the idea of learned helplessness, that the public unions are too mighty to fight against. That is not so.

As Doctor Samuel Johnson said: “There is no problem that the mind of Man can set, that the mind of Man cannot solve.”

N Satori
N Satori
4 months ago
Reply to  Samuel Ross

Well said. Good to hear an alternative to the ubiquitous conservative defeatism.

Samuel Ross
Samuel Ross
4 months ago
Reply to  N Satori

True! What is most important is to break free of a paralyzing paradigm of helplessness, that to change the ‘way things are’ is not possible.

Steve Jolly
Steve Jolly
4 months ago

Oh there’s no doubt it’s better to run the clueless dotard. They figured out that their real agenda of climate alarmism, open borders, and social justice virtue signaling was a loser in 2016 and have changed very little of it. They already found the best strategy they have at this juncture in 2020; find the blandest, wishy washiest, least threatening, least dangerous, figurehead to put on the ballot and then run him in front of the camera and hope nobody looks behind the curtain where the actual work is done. Old man Biden, a dinosaur from an earlier era, checks that box. They have no better options. This is what they’ve been reduced to. We’re basically being ruled by the Wizard of Oz at this point.