The Corner

California on the Horizon

It is generally known that Americans want it both ways — green giddiness and plenty of oil and gas for their cars and homes; lots of government services and low taxes; a big military but spasms of isolationism. But now California is where the rubber meets the road, and we just saw the big government side of the equation dissolve. With the highest income taxes, highest sales taxes, and biggest deficits, Californians finally said “no mas,” and let the cutting begin. Of course, we have expanded government to such a degree that “radical” cuts will only get us back to about 2005-sized government, and “tax cutting” in this loopy state will mean holding firm at a 9% sales tax and 10%-plus income tax. But one must begin somewhere.

One would hope this is wake-up time for Obama. His proposals will put the federal government a year or two away from a California-style reckoning. For now, the slash and burn tax approach to “them” (the top 5%) has assured the people that they can spend all this borrowed money on health care, education, cap and trade, and free this and free that. But in about a year’s time, as the deficits and interest rates mount, the fed will start looking everywhere for cash, and Obama’s “95% of you will get a tax credit” will go the inoperative way of military tribunals and rendition, and we will start to see a real pushback against taxes.

The Republican candidate who can demonstrate that tax cuts will increase aggregate revenue, and, when coupled with substantial spending cuts, will balance budgets, will be put in the driver’s seat. In about a year’s time, those gurus who were “disappointed” because Obama’s “stimulus” only led to a $1.7 trillion deficit when much bigger borrowing was needed, will be seen as unhinged as they really are.

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