April 30, 2012 - 10:28AM
With the latest report from the California nonpartisan Legislative Analyst's Office (LAO) showing that revenue to the state is continuing to lag, and that, therefore, the deficit will grow by a "few billion dollars" more, the recycled Governor Jerry Brown still is holding on to one last hope: That the Facebook stock offering will produce such large capital gains, that the taxes on those gains will bail out the state! Thus, the state which once represented the most advanced, productive, integrated physical economy in the world, with cutting-edge technologies employed in manufacturing and agriculture, combined with state-of-the-art infrastructure, is now breathlessly waiting for reports on profits made from degenerate social networking, which links together a sexually frustrated, fantasy-ridden population, to determine how much additional suffering will be inflicted by murderous budget cuts!
The latest LAO leak is deliberately vague in terms of the actual figures, but indicates that the expected revenue uptick — which has been forecast by the Governor's office since his inauguration — has still not happened. Personal income tax collections will be more than $2 billion below what Brown's advisers had forecast; corporate tax revenue is lagging more than $450 million behind. Unless sales tax revenues greatly exceed expectations, which is highly unlikely, the deficit for the last two months of the current fiscal year, which ends June 30, will be more than $3.5 billion, while the 2013 budget, which begins July 1, 2012, will face a deficit of between $10 billion to $12 billion.
It will probably be much bigger, as these figures come from current estimates, which have always been wrong, as Brown is continuing the method of estimating used by former Governor Schwarzenegger, which is based on past statistical trends. As economic forecaster Lyndon LaRouche has famously insisted, using statistical trends in economic forecasting is inherently incompetent. The failure of forecasters in California, who in recent years have been anywhere from $5 billion to $25 billion off, per annum, in their estimates, offers a decisive proof that LaRouche is right.
Further, depending on initial public offering (IPO) capital gains to provide revenue to fund state government is absurd. The dot.com bubble at the end of the last century, and the housing bubble the first decade of this century, provided short-term revenue gains for California, which hid the underlying decay of the real economy of this once-profitable, productive state. Once these bubbles popped, the state was put through a series of wrenching budget cuts, first under the imported Austrian fascist Schwarzenegger, now under the knife in the hands of Schumpeterian, small-is-beautiful fascist Brown. While Obama's JOBS act will likely lead to some short-term revenues from ill-advised, ultimately worthless IPOs, it will come from a new speculative bubble, which will be short lived.
Meanwhile, an alternative exists in NAWAPA XXI, which would revive the commitment to use frontier technologies to foster real increases in physical productivity. Water, dams, nuclear power, high-speed rail, new cities, versus "friending" on Facebook — we will soon see whether Californians are finally prepared to reject their Kookifornia image!