OTR Interviews

California: A glimpse of the nation's fiscal future?

California's financial turmoil could indicate what awaits the rest of the nation


This is a rush transcript from "On the Record," January 7, 2013. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: It's 9.8 percent unemployment, California's jobless rate is two full points above the national average. That is just one of the economic problems in California. And brace yourselves, is the federal government taking the rest of the country down California's path? "Los Angeles Times" Sacramento bureau chief, Evan Halper joins us.

Evan, can you tell me, looking at California, and I realize there's some improvement there. You have a high unemployment rate. You're getting some of your corporate business being poached by other states. You've got a huge reduction in state government employees. But can you describe some of the economic strategy to get California out of its current economic hole?

EVAN HALPER, "LOS ANGELES TIMES": Well, the economic strategy is basically they're trying to keep going the path, the course that they've been going. Silicon Valley has made a huge recovery and trying to lead this state out of the recession. And basically the big move just made, all the focus in state government was on raising taxes. There was going to have to be another many $1 billion of budget cuts and voters did not approve it tax hike recently approved. That was approved in November, and that sort of got the state budget battle.

VAN SUSTEREN: Is there any likelihood that Silicon Valley comes out of it that they're going to leave or they're going to -- are you seeing businesses leave California, staying, or even new ones coming in?

HALPER: Well, that's a matter of constant debate. There's a big effort to recruit some of the businesses, and some of them do open, you know, offices. They put their factories. Other states, Texas had success in poaching California businesses. Nevada is always poaching whatever from California it can.

But frankly, you know, the economy here is so big, the corporate people who are located here like living in California, they like the workforce, they like the state university system that, you know, supplies you know, a class of workers that it's hard to find elsewhere in the country. And, you know, it's hard for the Silicon Valley companies to stock, you know, their businesses with the kind of trained engineers that are available to them in California.

VAN SUSTEREN: Well, there's a little bit of rub among many people because in the fiscal cliff bill there was tax benefits extended to Hollywood which other parts of the country didn't get.

HALPER: Yes, Hollywood has been very skilled at keeping its tax breaks both in California and with the U.S. Congress. And this was another example. You had a lot of tax breaks up for discussion. There was a push to raise taxes, but Hollywood kept its tax break, and so did the wind companies, the companies that are very active in California trying to harness wind technology, they kept their tax credit, also.

VAN SUSTEREN: Evan, thank you.