Californicated

Big time.

dday of Hullabaloo explains:

Here's the problem, in a nutshell. In 1978 California passed Prop. 13, and Democrats have run for cover ever since. They should have put up a fight immediately. They should have outlined the consequences of mandating a 2/3 majority for tax increases but not for program cuts, the consequences of aligning commercial property tax caps along with residential, the consequences of the supermajorities making the state ungovernable and the Constitutional mandates pushed by special interests and written in by the voters making the state unfixable. But instead, Democrats cowered in fear of losing power, despite the demographic shifts in the state since the mid-1990s, so they lay low and never advocate for the necessary reforms, and buy completely into the myth that the 70's-era tax revolt remains alive and well, and they take public opinion polls on this as static and unchangeable through anything resembling leadership. Obviously Republicans are insane in this state, but they can barely manage 1/3 of the legislature (and if we had a half-decent campaign apparatus among California Democrats they'd lose that too) and shouldn't be feared in any respect. Yet our Democratic leadership exists in a post-1978 fog, a kind of "Sacramento Syndrome," where they've come to love their captors on the right, and have bought into their claims.

These severe program cuts are nothing more than a shock doctrine being placed on the citizens of California, with the burden anything but equally shared. Sadly, there is absolutely no one with any authority willing to stand up and say no. There are organizations outside the Capitol trying to lead and engage in systemic reform. But the Democrats in Sacramento are scared to death of it - that unknowable circumstance they cannot control. So the short term will deliver nothing but pain.

And I have to allow that California did produce Ronald Reagan, for which I must again apologize.

Paul Krugman:

The change in America’s financial rules was Reagan’s biggest legacy. And it’s the gift that keeps on taking.

The immediate effect of Garn-St. Germain, as I said, was to turn the thrifts from a problem into a catastrophe. The S.& L. crisis has been written out of the Reagan hagiography, but the fact is that deregulation in effect gave the industry — whose deposits were federally insured — a license to gamble with taxpayers’ money, at best, or simply to loot it, at worst. By the time the government closed the books on the affair, taxpayers had lost $130 billion, back when that was a lot of money.

But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.

These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped.

Together with looser lending standards for other kinds of consumer credit, this led to a radical change in American behavior.

We weren’t always a nation of big debts and low savings: in the 1970s Americans saved almost 10 percent of their income, slightly more than in the 1960s. It was only after the Reagan deregulation that thrift gradually disappeared from the American way of life, culminating in the near-zero savings rate that prevailed on the eve of the great crisis.

Robert Scheer thought that just maybe the government that sank billions into banks might help save California, but no:

The cause of California’s, and almost every other state’s, predicament is an economy ruined by deregulation policies that were secured by the lobbying efforts of Wall Street, led most prominently by Citigroup. So, I expected a federal government that has spent trillions salvaging the banks that got us into this mess to find the relatively minor sums needed to bail out California and other states that have been the victims of Wall Street’s dangerous games.

But I didn’t count on the tough-love steeliness of President Obama’s senior adviser David Axelrod, who told Californians that “there’s a limit to what the government can do” when it comes to bailing out our state (as opposed to the banks). Or of White House press secretary Robert Gibbs: “Obviously, the state has to make some very tough fiscal decisions … [given] the budgetary constraints that they have.”

And where California goes (down the toilet) the nation soon follows.....

Sorry about that, guys.