This month, newly minted Democratic California Gov. Gavin Newsom told the nation that California will “write America’s future.” In New York, Democratic Gov. Andrew Cuomo declared that America is now confronting “a great social depression” that requires action. Despite a recent Gallup survey that showed Americans think government is the biggest problem facing the country, both men made it clear they believe more government is the answer.
On America’s coasts, we’re seeing a significant test of our basic formula for greatness.
Are California and New York capable of demonstrating a viable American brand of socialism? Newsom and Cuomo seem to think so. They believe that more pervasive government will manufacture equality and create a more inclusive, just and opportunistic society.
It will be fascinating to watch these experiments – unless you’re a taxpayer in those states – but we can’t lose sight of the fact that we already know the outcome. It’s the false promise of socialism.
In his remarks, Gov. Newsom waxed poetic about building “one house for one California.” To Newsom that means a sanctuary state where taxpayers support illegal immigrants, the expansion of a costly cap-and-trade regime, guaranteed health care, and something he termed “inclusive, sustainable growth.”
But California’s massive economy provides a cautionary tale about how such a statist mentality can blunt even a robust private sector economy. Despite it being an economic powerhouse, California has the nation’s highest poverty levels fueled by already high housing prices, high taxes, burdensome government regulations, and energy costs that are 50 percent higher than the national average.
California has more than 800,000 unionized government workers and is the nation’s largest welfare state. According to the California Policy Center, the state’s generous welfare programs can benefit even individuals with incomes 200 percent above the poverty line.
According the U.S. Census Bureau, California has spent a trillion dollars on anti-poverty programs over the last 25 years, only to see its homeless problem and poverty increase. Policies that incentivize illegal immigration only add to the bill being footed by taxpayers.
Despite government being the proximate cause of the numerous challenges he aims to solve, look for Newsom to continue this government spending spree using California’s nearly $30 billion in various surpluses to fund new programs.
That number might sound like a lot, but instituting government-run health care alone would wipe it out, force tax increases, and continue the exodus of middle-class and higher earners from the state.
On the other coast, Andrew Cuomo, giving his third inaugural address from iconic Ellis Island, discussed a litany of policy proposals in rapid succession that he said would make New York a beacon of hope again. They included expanding abortion rights, “better” gun laws, something called “health care protection,” legalizing marijuana, a “New Green Deal,” free college and $15 minimum wage.
Unfortunately, none of those will do anything to help middle-income New Yorkers who simply can’t afford to live or retire there anymore. New York has lost more than 2 million people since the year 2000.
Unfortunately for Cuomo’s utopian vision, New York’s financial situation is already far worse than California’s. New York is bleeding higher earners. The three-term governor is facing a multibillion-dollar budget deficit. New York has also been ranked near dead last in economic climate. It leads the country in combined tax burden and is widely regarded as the most corrupt state in the nation.
Not exactly the kind of track record one would leverage to justify massive government expansion. But he’ll try anyway.
At least Cuomo has, at the moment, thrown cold water on calls for single-payer health care that would double the state’s budget. But he supports one on a national level.
In the last week Democratic New York City Mayor Bill de Blasio announced a government-run health care plan (even for illegal immigrants), free eyeglasses for children, and renovated public housing. He declared that there’s “plenty of money in this city … It’s just in the wrong hands.” Meanwhile, homelessness is exploding in the Big Apple and the city’s debt topped a staggering $116 billion in 2017.
In New York and California higher income earners are being replaced and outpaced by lower earners, who utilize more government services and generate less tax revenue. Combined, the two states have seen an outmigration of billions of dollars in private capital in recent years as companies look for more affordable places with less government regulation.
The test isn’t just whether California or New York can make these agendas succeed without bankrupting their states, killing jobs, or driving out too much capital. What’s happening on our coasts is a test of the resiliency of American private sector ingenuity, innovation and competition, which have proven to grow real wealth and success.
Will the rest of us learn from these imprudent flirtations with American socialism and prevent the chipping away of what made this country a beacon of freedom and opportunity? I hope so.