It is rare, even in the case of Paul Krugman, to read a column in which almost everything that is stated is either wrong or deliberately misleading. But his recent take on California’s renaissance is pure fantasy. I wish it weren’t.
Krugman starts with the premise that California conservatives, the most prominent being Ronald Reagan, helped to turn the formerly moderate Republican party into the “radical right-wing organization we see today”; California, he believes, did more than the South to spawn the Religious Right. How absurd! Reagan always governed moderately; he signed into law a liberal abortion statute and no-fault divorce; government and the state budget grew during his eight years as governor. Reagan’s record in California was about the same as that of Pat Brown, his predecessor, in actual terms of taxes, the size of government, and budget growth. Reagan’s achievement was not as a radical conservative, but as a pragmatist who for a while slowed, in Gingrich-Clinton compromise fashion, the trajectory of taxes and spending.
Conservatives have not really “declared the state doomed” but have instead pointed out that it is in dire jeopardy — and not just because “the political balance shifted.” After all, a supposed Republican, Arnold Schwarzenegger, was recently governor for eight years. The real problem is math, not politics, and it finally caught up with us in terms of massive deficits and unsustainable aggregate debt. Unfortunately for Krugman, the timing of his column roughly coincided with breaking news that the city of Stockton has just been allowed to declare bankruptcy (with many insolvent California municipalities keenly watching its precedent of shorting bondholders and contractors to meet staggering pension tabs) and with the McClatchy news report that the state auditor just declared California’s net worth to be minus $127.2 billion — mostly, again, as a result of skyrocketing bond and retirement liabilities, coupled with past sharp dips in revenues and a much higher unemployment rate than the rest of the country for the last five years.