This past week California governor Gavin Newsom appeared on Fox News to debate Sean Hannity about the policies and governance of the “Golden State” as well as its obvious cultural and economic decline. To be clear, I don’t care for Hannity and obviously I find Newsom to be a reprehensible little weasel of a man, so I don’t really have a stake in which side comes out on top. That said, the interview/dispute is being heralded by the political left as a “win” for Newsom as they claim he “destroyed” Hannity on his own show.
I have to examine this kind of rhetoric with some amusement because generally leftists don’t view debates the same way normal people do. They don’t care about being factually correct, they only care about winning by any means necessary. And winning can and often does include lying or misrepresenting statistics to confuse or deflect their opposition. Hannity just didn’t come prepared for the flurry of disinformation and cherry-picked data Newsom was armed with.
Democrats and the corporate media in general have invested an intense amount of energy into a propaganda campaign that paints California as the central pillar of the US economy and American governance. According to them, California is a socialist Utopia essentially holding the rest of the nation up on its shoulders, and without such blue states we would spiral into oblivion.
For the sake of focus, I will only break down California’s mismanagement here. Specifically, I think it’s important to debunk many of the false fiscal claims made by Gavin Newsom; the same claims which are spreading like a cancer into leftist talking points all over the internet. Let’s begin, shall we?
Lie #1: High Tax Blue States Like California Subsidize Red States
This argument is false for a number of reason, but let’s start with how Democrats present the claim – They argue that red states are among the top states receiving federal welfare dollars and subsidies, and that blue states like California are paying high taxes into those subsidies. This is why you will often hear leftists say that “red states would not be able to survive without blue states.”
Here’s why this is nonsense – Out of the top ten most indebted states in the US, seven of them are Democrat controlled. California has the most debt by FAR with $519 billion in the red, around 60% more debt than New York and Texas which are #2 and #3 on the list. California also anticipates a $32 billion deficit in 2023. The state does not have the funds to support itself, let alone red states.
The bottom line? California takes far more money from the federal government that they pay out.
As of the most recent tax year for which figures are available, Californians paid $234 billion in federal income taxes. However, the state has already been allotted over $390 billion in funds from the federal government so far in 2023 and the year is only half done. Not only that, but CA took even MORE federal money from 2020 – 2022 ($400 billion to $500 billion) each year. Meaning, on average, CA is taking around $150-$200 billion more in federal money than it pays back in federal taxes every year.
Gavin Newsom often brags about California’s amazing budget surplus during covid, but the reality is that all of that cash was fed to the state by the federal government and the federal reserve printing press. For example, California defaulted on almost $19 billion in unemployment debt during their lockdowns, which they then had to borrow from the federal government to cover. They then passed that debt on to struggling business owners, forcing them to shoulder the burden through extra taxation while Newsom expanded deficit spending.
To be sure other states had to take federal funds as well to avoid unemployment default, many of them Democrat controlled because of their pointless extended mandates and business closures. Most states are in the hole when it comes to federal cash. But, the fact remains that California is a money pit; a prostitute for federal funds that creates exponential debt while leaching far more than their fair share. Blue states like California don’t foot the bill for red states. They can’t, because they are broke.
Lie #2: California’s GDP Is So Large That It Debunks All Economic Criticism
This was one of Newsom’s primary responses to Hannity during their debate over California’s decline – California has the 4th largest GDP in the world (over $3 trillion), therefore no criticism of its economy is valid. With that in mind, I’m going to tell you one of the biggest open secrets about how states like California, the federal government and the federal reserve calculate GDP:
They count a majority of government spending towards total GDP.
Yes, that’s right, California takes large amounts of tax dollars from citizens, takes hundreds of billions of dollars from the federal government, spends it all on numerous programs from welfare, to student loans to medicare/medicaid, then adds it all to their total GDP as if the government actually produces something other than debt.
Again, a lot of states do this in their calculations, but in blue nightmare states like California that have refined the art of GDP fraud down to a science. The CA government has found that all they have to do to drive up their GDP stats to record levels is keep borrowing and taxing and then spend as much as possible.
Another factor to consider is that CA’s real GDP adjusted for inflation is not generally cited by the media or by Democrats. With covid helicopter money triggering a 40-year spike in inflation in the past few years, California has some of the highest prices on goods and services in the country (3rd most expensive). In fact, prices are so high that many middle class workers have trouble surviving there. And, the higher the prices go, the higher GDP goes by extension.
If real GDP adjusted for inflation is not considered, then California’s economy might look much stronger than it actually is. If you want to know why CA supposedly about to become the 4th largest economy in the world, yet every major city in California is littered with homeless people and tent cities, it’s because their GDP is a shell game.
Lie #3: There Is No Citizen Exodus From California
Yes, there is. This is probably one of the more egregious lies that Newsom spreads in his Fox News interview as he cited “studies” out of institutions like UCLA to support his position that “more people are leaving red states per capita” than California.
First of all, the per capita argument is dishonest in this situation. What Newsom is trying to avoid is the fact that California has been losing its population to net domestic migration for around a decade.
In 2020 the state saw a loss of 725,000 people with 359,000 net losses in residents after gains are accounted. They lost 700,000 more people than they gained from April 2020 to July 2022. To put this in perspective, losing that many people is the same as a city the size of Seattle disappearing from the California map in the span of two years. California starting out with a larger population is irrelevant to the overall trend of population losses.
One of the best points Hannity made to counter Newsom’s disinformation was the fact that U-Haul had no trucks for Californian’s trying to leave the state because so many residents were relocating and no one was moving in. Newsom sneered at the data, likely because he knows it undermines his entire narrative.
U-Haul did indeed run out of trucks in CA because so many people were leaving. The top destination for U-Haul trucks was Texas followed by Florida, Tennessee, South Carolina, and Arizona. One could argue over the potential reasons for the exodus from CA, but the exodus is a FACT (I believe Newsom’s draconian covid mandates were the biggest reason for the migration, but taxation and a hostile business environment are solid causes also).
Furthermore, California is a sanctuary state which protects illegal immigrants from deportation, and illegal immigrants are counted as part of the resident population in any census. Every surge in migrants can offset California’s total population decline caused by real citizens relocating. California has handed out at least 1 million state drivers licenses to illegal immigrants since 2015, and the state is estimated to have at least 2.7 million migrants within its borders.
Lie #4: California Provides Opportunities For The Middle And Lower Class
No. Let’s go through the list of reason why California is a hellscape for the middle and lower classes – The state has the 2nd highest housing prices in the nation, only under Hawaii. It is the most expensive state for rent in the US, surpassing Hawaii with an average monthly rental cost of $1900. CA also has the third highest food prices in the country.
The median household income in California is $78,000, or $6500 per month (before taxes). The average total cost of supporting a family of four in California including basic necessities is $6700 per month. This is why the Pacific state had the highest homeless rates in the US in 2022 (except for Washington DC). Living in CA is a net negative prospect for the average person, and forget about starting a small business and building something better – California is consistently rated one of the worst states for starting and maintaining a business, which is why companies have been leaving in droves over the past few years.
Why Do They Lie?
I can only theorize on this issue, but I suspect that leftists lie about California as a success story because they see the state as the culmination of their ideology. It’s the beta-test state for numerous socialist policies to fester and then spread to other parts of the US. It’s a symbol of their vision for the future, and it’s falling apart. So, instead of fixing what’s really wrong with it they fabricate a narrative of a state on the rise rather than on the decline and attack anyone who points out the obvious problems.
I also believe that looking at California is a lot like looking into a crystal ball that shows us America a couple years from now. The way California is run, with endless debt and a cycle of statistical fallacies to hide the growing fiscal cancer, is a lot like the way our federal government is run. When we see the crumbling of CA, we are seeing a glimpse of what will soon happen to the rest of the country.
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They have to make it look as good as they can. They have to lie. Because if they don’t divert blame they could end up paying the price for their mismanagement later.
Article cross-posted from Alt-Market.